Government mulls 15% excise tax on passenger cars

Here is bad news for car buyers.

Government is seriously considering the imposition of a 15 percent excise tax on passenger cars and motor vehicles carrying up to 10 people to raise much needed revenues.

This would mean that Asian Utility Vehicles (AUVs), like Toyota’s Revo, Mitsubishi’s Adventure and Izusu’s High-Lander that previously were exempted from excise tax will now be taxed.

The Board of Investments (BOI) said that a flat excise tax will also prevent price manipulations without sacrificing the quality of vehicles.

The BOI is also proposing that the application of the excise tax rate should be based on retail value or pre-value added tax (VAT).

The retail value is the retail price actually paid by the buyer/importer to the dealer.

The rationale for applying the excise tax on retail value is supposedly to prevent under-invoicing.

At present, government imposes an excise tax based on engine displacement.

A 15-percent excise tax is slapped on cars with engine displacement of up to 1600 cc for gasoline and up to 1800 cc for diesel.

For engine displacement of 2700 cc for gasoline and up to 3000 cc for diesel, the rate is 50 percent.

A 100-percent excise tax is slapped on cars with an engine displacement of 2701 cc and above for gasoline and 3001 cc and above for diesel.