TRAIN in full steam ahead
The proposed Automotive Excise Tax which passed through Senate hearings three weeks ago is on its final stages of being enacted after the bicameral conference committee has reconciled its differing provisions of the House and the Senate. This will come into law once the president signs and orders its enactment anytime soon.
According to GMA News Online, the proposedTax Reform for Acceleration and Inclusion Act (TRAIN) sailed through Bicameral Conference Committee less than a month after Senate passed its third and final reading.
The two phased bill signed off by Congress was simplified by the proposed Senate Bill with the vehicle excise tax under the two tiers. The act has now been further detailed to four tiers. Aprovision was also added for adjustment based on fluctuation of the Peso/Dollar exchange rate.
The difference in rates for the House proposed excise tax is only at 3-percent for vehicles with an Net Manufacturer's selling price at P 600,000 or less, but the new act proposes excise at 4-percent. This means that the Committee's version of the proposed excise tax for vehicles will have a slightly more significant effect on cars right away compared to the one proposed by Congress.
Here is how the Auto Excise will equate;
•4% for cars priced at P 600,000 and below
•10% for cars priced at P 600,000 to 1,000,000
•20% for cars priced at P 1,000,000 to 4,000,000
•50% for cars priced at P 4,000,000 up
The Proposed Bicameral revision, with its simplified single phase scheme, increased the P 600,000 and below bracket to 1% while imposing lower taxes on the P 600,000 to P1,000,000 bracket. The 20% increase in taxes for the P 1,000,000 to 4,000,000 bracket does not pose greater rise in prices considering the fact that this bracket is where the SUV and Mid-Size to Large Luxury Sedans fall under. This is, I think, good news for the luxury segment.
In the revised act, there are also vehicle classes that are excluded from the increase in excise taxes. Under the proposed bill, single cab trucks, pick-up trucks, cargo trucks, cargo vans, jeepneys and special-purpose vehicles will be exempted for additional excise taxes. The bill also proposes to exempt electric vehicles (EV) as well as hybrids (gas-electric and diesel-electric) to encourage the use of cleaner and greener technology.
During the Senate hearing of the TRAIN, the Senate approved a simplified two-tier excise tax of 10 percent for automobiles valued at P1 million and below, and 20 percent for P2 million above.
Senator Ralph Recto proposed the amendment to the measure citing that if the excise tax on automobiles is too high , it would prompt smuggling of vehicles into the country.
The Act will also impose excise taxes on petroleum products and will be effective once the president signs and is enacted.
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