The Proposed Excise Tax On Cars Has Been Revised Yet Again

3 min read By eCompareMo on May 8, 2017

Since last year, discussions about the government’s plan to impose excise tax on new vehicles have been going around. From the initial breakout of the news to the revisions that surfaced, it has caused nothing but confusion among the public as to how the government will levy new cars under the proposed comprehensive tax reform.

Just recently, local car resource website AutoIndustriya.com revealed that the automobile component of the Comprehensive Tax Reform Program has once again been amended.

How is the amendment different from the previous one? And will it greatly affect the car industry, which has been enjoying unprecedented growth for years now?

Two year, too near

According to the new version of the car excise tax program by the government, the recent revisions show some glaring changes from the previous one reported last February. The latest AutoIndustriya.com report on the levy has two glaring changes, which look more palatable from a consumer perspective.

First, the most noticeable revision in the proposal is the inclusion of a fifth bracket. Unlike in the previous version where cars with a current market value of P2.1 million and above would be taxed P1.22 million and an additional 200 percent of value in excess of P2.1 million, the more upscale market has been divided further.

With the May version of HB 4774, a new bracket was created for vehicles worth P3.1 million and above.

Second, instead of a single swift implementation of the excise, the government will instead opt for a gradual increase that will be implemented in two succeeding years.

Under the new bracket, cars priced between P600,000 and P1.1 million will be charged with P18,000 fixed tax and 30 percent of value in excess of P600,000 in 2018.

The year after, the levy will increase to P24,000 and 40 percent.

Last, the excise imposed were lower than the ones published last February, both on fixed and variable taxes.

For instance, the February version of HB 4774 would tax cars worth between P1.1 million and 2.1 million with P224,000, with additional 100 percent of the remaining value in excess of P1.1 million. This is more bearable than the P1.22 million and 200 percent for the excess originally planned for the tier.

Confused? So are we. To make things clearer, here’s a comparison chart of all the iterations of HB 4774 based on AutoIndustriya.com’s report:

Aside from leaking the newest schedule of car excise taxes, AutoIndustriya also revealed that HB 4774 passed its first reading at the House of Representatives Ways and Means Committee last week.

For it to become a law, it has to go through more readings at the Lower House, a bicameral session with the Senate, and finally, the President’s table.

Will this version of the house bill finally become a Republic Act? Nobody really knows at this point.