STILL a favorite clubhouse talk these days is the proposed increase in excise tax for vehicles.
Once passed into law by both the lower and upper chambers, House Bill (HB) 5636 will jack up vehicle prices in the next two years. Already, the bill has been passed in the Lower House.
Good for the government but bad for the car buffs?
There is but one reason for the new bill, the move fathered no less by Finance Secretary Carlos G. Domiguez: To raise revenues in the government’s bid to accelerate economic growth through massive infrastructure projects and to expand assistance to socioeconomic services and other people-oriented projects, such as traffic-management solutions and even climate-change directions.
As approved by Congress, the bill provides that for next year, 2018, excise taxes will go up to 3 percent, from 2 percent at present, for vehicles having each a net price of P600,000.
Vehicles pegged from P600,000 to P1.1 million, there is an increase of P18,000, plus 30 percent of value in excess of P600,000, from P12,000, plus 20 percent of value in excess of P600,000 at the present going rate.
Do you follow?
Read on, fellers.
Vehicles pegged from P1.1 million to P2.1 million each, you need to pay P168,000 more, plus 50 percent of value in excess of P1.1 million from the current rate of P112,000, plus 40 percent of value in excess of P1.1 million.
Getting complicated?
Sorry, but that’s how the cookie crumbles—so they say.
Now for rides worth from P2.1 million to P3.1 million, the excise tax is raised to P668,000, plus 80 percent of value in excess of P2.1 million, as against the current P512,000, plus 60 percent of value in excess of P2.1 million.
To cap 2018’s increased tax rates, the bill will inflict a tax of P1.468 million to vehicles priced at P3.1 million, plus 90 percent of the value in excess of P3.1 million.
You think that’s big enough?
Think again, fellers.
In 2019 tax rates will further go up.
1) Excise tax of 4 percent will be levied to vehicles with net manufacturer’s price/importer’s selling price of P600,000.
2) P24,000, plus 40 percent of value in excess of P600,000 for vehicles worth from P600,000 to P1.1 million.
3) P224,000, plus 60 percent of value in excess of P1.1 million for vehicles worth from P1.1 million to P2.1 million.
4) P824,000, plus 100 percent of value in excess of P2.1 million for vehicles worth from P2.1 million to P3.1 million.
5) P1.824 million, plus 120 percent of the value in excess of P3.1 million for vehicles worth over P3.1 million.
(Disclosure: Much of the computations above were culled from Inquirer’s Ben de Vera, and I am eternally grateful. Thank you, Ben.)
And, as if to console the “poorer segment” of our society, the Department of Finance (DOF) said that under the new excise vehicle tax program, “basic cars will be taxed at lower rates, while more expensive cars will be taxed at higher rates.”
As always, slashed to the max are the pockets of society’s lower bracket under the new excise-tax scheme. That’s because the majority of them depend heavily on car loan promotio ns to be able to grab that dream car of theirs.
But to the moneyed, their checkbooks would hardly absorb a dent, no matter the excise-tax rates imposed on the high-end cars that they desire. The rich will always be rich: Their vaults are as deep as the Mindanao Deep.
To be hurt endlessly are the dreamers from the middle class just trying to acquire their first car.
The DOF’s computations for 2019 rates will put the Toyota Vios up at P609,734, from P599,000, and the Mirage at P753,261, from P740,000.
The Innova 2.0J will go up to P919,000, from P962,725 and the Everest Titanium 2.2 4×2 to P1.995 million, from P1.739 million.
There will be changes, of course, in prizes when the bill is finally passed in the Senate, but what the DOF ultimately intends to realize are increased vehicle revenues to P14.1 billion in 2018, P23.4 billion in 2019, P24.8 billion in 2020, P26.3 billion in 2021 and P27.9 billion in 2022.
That’s what you call going way beyond—thinking out of the box would be the apt description?—President Duterte’s term ending in 2022. Positive thinking, as others put it?
PEE STOP With Dominguez’s huge billion-peso projection in vehicle taxes for the next five years, will Duterte make mention of the car industry in his second State of the Nation address on Monday, July 24? That’d be awesome, considering the key role that the car world has consistently played to help spur economic growth year in and year out. The last time I made my own accounting a couple of years back, the motoring industry is worth P60 billion. And that’s just a ballpark figure…Greetings of happy birthday from Dayong and Aya to writer-journalist Sol F. Juvida. Cheers!