Tax reform version in Senate sets higher excise taxes on vehicles

Sep 25, 2017 | Same topic: Up-to-date consumer reports
The Senate version of the first comprehensive tax reform package is effective January 2018.

The proposed changes on fuel and new vehicles under the Tax Reform for Acceleration and Inclusion (House Bill 5636) has been the biggest motoring headline for 2017.

It seems to folks that the Philippines stick to its original plan for raising excise taxes on automobiles. According to latest car news, several senators has voted for the latest Senate version of the first comprehensive tax reform package - Senate Bill (SB) 1592.

How Senate, House tax reform bills differ

The Senate version is said to be accorded in part with the Lower House’s version – HB 5636 but also provided for expanded provisions. The SB 1592 was approved via a 17-7 vote and seeks to impose new automobile excise tax. These excise tax rates under the Senate version are relatively higher than the scheduled excise tax for 2018, but still relatively lower than the proposed excise tax rates for 2019 under the Lower House’s version.  

Are you not alarmed? Well, think twice guys. Reports are saying that instead of gradually increasing the excise tax to the target level over two-phase increase proposed by HB 5636, the SB 1592 will see automobiles fetching high prices in a single phase (immediately by January 2018).

Many cars on the road at one time

Tax reform version in Senate sets higher excise taxes on vehicles

Take cars tagged with P600,000 or less as an example. Under the Lower House’ version, the first bracket would see only a 3%  raise next year, before increasing it to 4% in 2019. Under the Senate version, this price bracket will have a 4% raise immediately upon the implementation.

The full effects of the proposed excise tax for vehicles under the HB 5636 have not been felt. Perhaps the SB 1592 imposes the new tax structure with immediate effect.

The rates of SB 1592, which can be implemented by January 1, 2018, are as listed below: 

Net Manufacturer’s Price/Importer’s Selling Price Rate
Under P600,000  4%
From P600,000 to P1.1 million  P24,000 + 35% of excess over P600,000

From P1.1 million to P2.1 million 

P199,000 + 55% of excess over P1.1 million
From P2.1 million to P3.1 million  P749,000 + 90% of excess over P2.1 million
Over P3.1 million  P1,649,000 + 100% of excess over P3.1 million

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