HIGHER excise taxes on low-priced automobiles could dampen the hopes and dreams of many Filipinos to own a car.
Under the proposed Tax Reform for Acceleration and Inclusion Bill, or House Bill (HB) 4774, the excise tax on automobiles, which is on top of the 12 percent value-added tax, would be doubled from two percent to four percent for cars priced up to P600,000.
Vehicles priced more than P600,000 up to P1.1 million would be slapped a P24,000 tax plus 40 percent of the value in excess of P600,000. The current tax rate for this tier of cars is P12,000 plus 20 percent of the value in excess of P600,000.
For vehicles worth over P1.1 million up to P2.1 million, the tax would be P224,000 plus 100 percent of the value in excess of P1.1 million. The existing tax rate for this category of cars is P112,000 plus 40 percent of the value in excess of P1.1 million.
Cars costing more than P2.1 million would be slapped a tax of P1,224,000 plus 200 percent of the value in excess of P2.1 million. The prevailing tax rate for this class of cars is P512,000 plus 60 percent of the value in excess of P2.1 million.
Assuming Congress decides to eventually approve the excise taxes, we may have to stagger or space out its application, particularly on cars priced up to P1.1 million, to make it easier on the pockets of low- and middle-income families.
For instance, with respect to cars priced up to P600,000, instead of the entire extra two percent excise tax slapped right away, it might be better to have the initial one percent kick in on the first year, and the other one percent on the second year.
The AmBisyon Natin 2040 survey of the National Economic Development Authority (Neda) showed that 62 percent of Filipinos want to own a car, in a country where 47 percent of households are carless, 37 percent have one car and 16 percent have more than one car.--Makati City Rep. Luis Campos Jr.