Should pickup trucks in PH have excise tax? [Poll of the Week]

Pickup trucks in the Philippines might soon have a higher price tag as the government is looking to impose excise tax for the said vehicle type. The House Committee on Ways & Means (HCWM) has approved a proposed measure that seeks to bring back excise tax on pickup trucks sold in the Philippines.   

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The reason behind the proposal to bring back excise tax on pickup trucks in the Philippines is for the government to generate increased revenues. HCWM chair and Albay Representative Joey Salceda approved the Passive Income and Financial Intermediary Taxation Act (PIFITA), also known as Package 4 of the Comprehensive Tax Reform Program or CTRP last August 2022. Included in the said bill is the removal of excise tax exceptions for pickup trucks.

As a review, pickup trucks are currently exempted from excise tax due to the Tax Reform for Acceleration and Inclusion (TRAIN) law that took effect in January 2018. The TRAIN law exempts pickup trucks from excise tax as it is considered workhorses for small business owners and professionals.

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Department of Finance (DOF) Secretary Benjamin Diokno shared that the Department of Trade and Industry (DTI) sees the current tax exemption on pickup trucks as a bit questionable. 

Diokno said that the DTI is claiming that the idea behind the pickup truck’s tax exemptions under the current TRAIN law is being circumvented by car brands. The DTI argues that car brands in the Philippines are offering pickup trucks that are more lifestyle-oriented rather than workhorses.        

“Pickups were granted the special tax treatment for their utility as workhorses for small business owners and professionals in their livelihood. The Department of Trade and Industry has observed that manufacturers modify pickup trucks to serve as passenger, leisure, or sport utility vehicles. This scheme allows manufacturers to circumvent the provision of the law and purpose of the exemption,” Diokno said.

If the proposed measure is signed into law, the prices of pickup trucks sold in the Philippines will increase. It will be taxed similarly to other “traditional” vehicles.    

Php 600,000 and below - 4 percent

Php 600,000 to Php 1 million - 10 percent

Over Php 1 million to Php 4 million - 20 percent

Over Php 4 million - 50 percent 

Of note, the DOF is expecting to earn additional net tax revenues up to Php 52.6 billion from 2022 to 2026 if the excise tax will be given to pickup trucks.  

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The Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) voiced its concern over the possible re-imposition of excise taxes for pickup trucks.   

“CAMPI strongly objects to the proposal to remove excise tax exemption of pickup trucks, a major component of the commercial vehicle segment,” said CAMPI President Rommel Gutierrez.

Other than having a price increase, Gutierrez said that new taxes on motor vehicles will impact sales volumes that could result in less revenue for the government.

That said, should the government remove the excise tax exemption on pickup trucks in the Philippines? Cast your vote now in Philkotse’s Poll of the Week.