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DOF says cars will be affordable despite excise tax

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RG Cruz, ABS-CBN News

MANILA - Finance Secretary Carlos Dominguez on Monday said an excise tax on vehicles won&#x27;t make all automobiles beyond affordable.“Most expensive cars will be charged higher excise rates to ensure progressively. When taken as part of the package, most cars will still be affordable,” Dominguez told the House Ways and Means Committee. The excise taxes on automobiles is contained in Article VI of both House Bill 4774 authored by Rep. Dakila Carlo Cua (Lone District, Quirino), committee chairman, and HB 4688 by committee vice chairman Rep. Joey S. Salceda (2nd District, Albay). Both bills are titled “Tax Reform for Acceleration and Inclusion” or TRAIN.Chapter VI Section 149 of both bills titled “Excise Tax on Miscellaneous Articles” provides &quot;there shall be levied, assessed and collected an ad valorem tax on automobiles based on the manufacturer’s or importer’s selling price, net of excise and value-added tax.&quot;Under Cua’s HB 4774, the excise tax for automobiles shall be raised to 4 percent from the present 2 percent if the net manufacturer’s price/importer’s selling price is up to P600,000.If the price is P600,00 to P1.1 million, the tax rate shall be P24,000 plus 40 percent of value in excess of P1.1 million. The present tax rate is P12,000 plus 20 percent of value in excess of P1.1 million.If the price is over P1.1 million to P2.1 million, the tax rate shall be P224,000 plus 100 percent of value in excess of P1.1 million. The present tax rate is P112,000 plus 40 percent of value in excess of P1.1 If the price is P2.1 million, the tax rate shall be P1.224 million plus 200 percent of value in excess of P2.1 million. The present rate is P512,000 plus 60 percent of value in excess of P2.1 million. The bill also deletes the following provisions from the original Section 149: “Provided, That the brackets reflecting the manufacturer&#x27;s price or importer&#x27;s selling price, net of excise and value-added taxes, will be indexed by the Secretary of Finance once every two (2) years if the change in the exchange rate of the Philippine peso against the United States (U.S) dollar is more than ten percent (10%) from the date of effectivity of this Act, in the case of initial adjustment and from the last revision date in the case of subsequent adjustments. The manufacturer&#x27;s price or importer&#x27;s selling price, net of excise and value-added taxes, shall indexed by the full rate of the peso depreciation or appreciation, as the case may be.Provided, further, that in case the change in the exchange rate of the Philippine peso against the U.S dollar is at least twenty percent (20%) at anytime within the two-year period referred to above, the Secretary of Finance shall index the brackets reflecting the manufacturer&#x27;s price or importer&#x27;s selling price, net of excise and value-added taxes, by the full rate of the peso depreciation or appreciation, as the case may be.”Lastly, the bill amends the definition of an automobile to mean “Any four or more wheeled motor vehicle regardless of seating capacity, which is propelled by gasoline, diesel, or any other automotive power except purely powered by electricity. Provided, That for purposes of this Act, buses, trucks, cargo vans, jeeps/jeepneys/jeepney substitutes, single cab, chassis, and special-purpose vehicles shall not be considered as automobiles.”Meanwhile, under Salceda’s HB 4866, the excise tax for automobiles shall be raised to 5 percent from the present 2 percent if the net manufacturer’s price/importer’s selling price is up to P600,000.If the price is P600,000 to P1.1 million, the tax rate shall be 20 percent of net manufacturing/importation price.If the price is more than P1.1 million to P2.1 million, the tax rate shall be 40 percent of net manufacturing/importation price.Lastly, if the price is P2.1 million, the tax rate shall be 60 percent of net manufacturing/importation price. Dominguez also sought to allay fears that the proposed excise on oil products and widening of the coverage of the VAT will be regressive. “The top 200,000 households, comprising 1% of the population, consume 13% of oil products. The top 10% or 2 million households, account for 51% of oil consumption. The rich will bear the brunt of increased excise for oil products,” he explained.Dominguez said their comprehensive tax reform plan intends to address the three flaws in the tax policy that cause the tax effort to fall below the regional norm: non-indexation to inflation, notably the excise on oil products, which erode the value of taxes over time; a large number off exemptions and entitlements in both fiscal incentives and the VAT system that basically exempt 50% of the economy and bank secrecy rules that prevent the BIR and the BOC from conducting proper audits.The tax reform package also includes the reduction of personal income taxes.

Speaking before the House Ways and Means Committee, Finance Secretary Carlos Dominguez assured lawmakers that the excise tax on automobiles won't make all automobiles beyond affordable.

Speaking before the House Ways and Means Committee, Finance Secretary Carlos Dominguez assured lawmakers that the excise tax on automobiles won't make all automobiles beyond affordable.

DOF says cars will be affordable despite excise tax

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DOF says cars will be affordable despite excise tax

RG Cruz,

ABS-CBN News

Published February 14, 2017 02:16 AM PHT

Read More:

excise tax

taxes

DOF

oil

cars

Carlos Dominguez

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