Gov't agrees to ease proposed excise tax on new cars

 Following the outburst of the local automotive industry on the government's proposed plan to increase the excise tax on vehicles, the Department of Finance (DOF) and the Department of Trade and Industry (DTI) have agreed to give the lowest excise tax adjustment possible--but only for vehicles on the lower end of the price range.

The agreement came after the DOF and DTI met with representatives from the local automotive industry and members of Congress' Ways and Means Committee at the Lower House.

When the proposal was first raised, officials in the local automotive industry questioned its timing since it was not aligned with the recently-implemented Comprehensive Automotive Resurgence Strategy (CARS) Program. In addition, car manufacturers have also expressed that additional duties on vehicles will curtail the growth of the industry.

In the DOF's original proposal, if a vehicle's selling price is P600,000 and below, the excise tax will be increased from 2 percent to 5 percent. On the opposite end of the scale, if a vehicle is priced over P2.1 million, its excise tax will increase from P512,000 plus 60 percent of the value in excess of P2.1 million to a more straightforward 60 percent.

DTI Secretary Ramon Lopez though failed to mention the final excise tax rate and bracketing for automobiles under the tax reform package. The official clarified though that easing the excise tax on cars would not risk the revenue gains of the government under the tax reform package.

“It’s a little price increase so it won’t affect the demand. Small adjustment, higher volume and you still get your target peso value,” Lopez pointed out.