Cute wheels

FHM (Philippines) - - Contents - Words: Jakob keane Viri

First, a few words about this thing they call“ex­cise tax” and how it ap­plies to the sale of cars:

An ex­cise tax, ac­cord­ing to the Bureau of In­ter­nal Rev­enue, is “a tax on the pro­duc­tion, sale, or con­sump­tion of a com­mod­ity in a coun­try. It is ap­plied on goods man­u­fac­tured or pro­duced in the Philip­pines for do­mes­tic sale or con­sump­tion or for any other dis­po­si­tion... and on im­ported goods.” The of­fi­cial name for this tax, which will take ef­fect in Jan­uary 2018, is House Bill 5636, or Tax Re­form for Ac­cel­er­a­tion and In­clu­sion (TRAIN).

The prod­ucts that will be sub­ject to the tax are as fol­lows: al­co­hol, to­bacco, pe­tro­leum, min­eral prod­ucts. Cars fall un­der “mis­cel­la­neous prod­ucts.” The gen­eral ef­fect of the ex­cise tax on new cars is that they will cost more, ob­vi­ously. We will not go into spe­cific rates here, but the key take­away is this: price in­creases on cars will be much, much higher on lux­ury cars, those cost­ing P8 mil­lion and above. As you go lower down the price bracket, so is the tax im­posed.

There is an­other tax mea­sure that is of­ten cited in con­junc­tion with the ex­cise tax to some­how soften its blow: the in­come tax cuts un­der the pro­posed com­pre­hen­sive tax re­form pro­gram. What this means es­sen­tially is that take home pay will be higher (ex­cept for the mil­lion-a-month earn­ers, who will ac­tu­ally pay more taxes. But the in­crease is so mi­nus­cule by their stan­dards they must be laugh­ing hard at the joke). This cre­ates a cu­ri­ous ef­fect on the auto in­dus­try: While cars will be gen­er­ally more ex­pen­sive, peo­ple—most es­pe­cially those in the mid­dle in­come bracket—will ac­tu­ally find them­selves with more pur­chas­ing power for cars.

Which brings us to the rea­son why the Suzuki Celerio is here. If we take this tax give-and-take to its log­i­cal con­clu­sion, the smartest thing to do for any­one about to buy their first car is to head straight to the small cat­e­gory, where ex­cise tax is low­est, and trust that a bank loan ap­proval is just an hour away be­cause, well, that’s how car deal­ers keep the sales com­ing.

There are sev­eral op­tions in the small cars mar­ket, but the Celerio is turn­ing out to be a best buy for one sim­ple rea­son: it of­fers more space. You wouldn’t think it's pos­si­ble to say com­pact car and more space in a sin­gle breath, but Celerio ac­tu­ally achieves in do­ing it. As far as sales pitches go, more space in a very small car is gold.

And then there is the price. Right now the man­ual ver­sion is at P538,000 and the CVT is at P569,000. It’s safe to as­sume that Suzuki will be jug­gling some num­bers to keep it un­der the P600,000 mark af­ter the ex­cise tax kicks in. Bottomline: if you have more money and it's still that cheap, it’s worth buy­ing.

SUZUKI CELERIO A car that can slip through the cracks be­tween lanes—which is what an ul­tra­com­pact car should be. You just got a free space up­grade, be­cause there is more room in there than is ap­par­ent. You got your­self a spe­cial dis­count....

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