THE future of car sales in the country will be determined by the government’s decision to increase its tax on automobiles within the year or in 2018, a local car dealer said.
Markane Goho, Gateway Motors president, said he expects car sales to go up this year, followed by a decline upon the implementation of the excise tax increase the Department of Finance (DOF) has proposed.
“It (tax) will impact car sales. Mokusog na siya before ma implement kay mopalit man ang mga tawo daan. Next year na siguro ni mohinay (It’ll probably pick up speed before the increase is implemented, because people will want to buy before that. Next year, sales might slow down),” Goho said in a phone interview yesterday.
Currently, a two percent tax is imposed on cars priced P600,000 and below, said Bureau of Internal Revenue (BIR) 13 Legal Chief Atty. Neri Yu. For cars priced between P600,000 and P1.1 million, the tax is equivalent to 20 percent of the car’s value in excess of P600,000.
Under the DOF proposal, the tax for entry-level cars priced P600,000 and below would increase from two percent to five percent. For luxury vehicles priced P2.1 million and above, tax would be equivalent to 60 percent of the manufacture and import price, up from the current tax of P512,000, plus 60 percent of the amount in excess of P2.1 million.
For Gateway Motors, 70 percent of cars sold in Cebu are those priced below P1 million. Higher excise taxes would affect sales. Gateway Motors carries the brands Kia, Nissan, BMW, Peugeot, and Mahindra.
The luxury cars, in particular, although a minute segment of the local car industry, will be the most affected, Goho said.
Finance Secretary Carlos Dominguez previously said that under the DOF timetable, the excise tax increase will be implemented by 2018.
The agency’s decision to push for higher excise tax for cars, said Dominguez, is guided by the administration’s 10-point economic agenda. It is also meant to slow down the purchase of new cars, in view of the worsening traffic in some cities.
According to the National Tax Research Center, the Philippines has the lowest excise tax in Southeast Asia. Other countries tax motorcycles, unlike the Philippines where excise taxes are applied only on vehicles with four wheels or more.