House mulls at least 100% hike in car tax

By JESS DIAZ Prices of new cars, including sport utility vehicles, are expected to go up substantially.

The House of Representatives is considering an administration proposal that seeks to increase automobile excise tax by 100 percent for vehicles costing up to P1.1 million, and by more than 300 percent for those priced over P2.1 million.

The new rates are targeted to take effect on July 1 this year.

Quirino Rep. Dakila Cua, chair of the house ways and means committee, adopted the administration’s proposal in his bill. His committee has started public hearings on House Bill 4774.

Under the proposed measure, the tax on automobiles priced up to P600,000 will go up from two percent to four percent.

Those selling over P600,000 to P1. l million would be taxed at P24,000 (up from P12,000) plus 40 percent (up from 20 percent) of the amount in excess of P600,000.

Those selling over P1.1 million up to P2.1 million would have a tax of P224,000 (up from P112,000) plus 100 percent (up from 40 percent) of the amount in excess of P1.1 million.

Cars costing more than P2.1 million would have a tax amounting to P1.22 million (up from P512,000) plus 200 percent (up from 60 percent) of the amount in excess of P2.1 million.

The bill defines an automobile as “any four- or more wheeled motor vehicle, regardless of seating capacity, which is propelled by gasoline, diesel, or any other motive power except (those) purely powered by electricity.”

It does not include “buses, trucks, cargo vans, jeeps/ jeepneys/jeepney substitutes, single cab chassis, and special purpose vehicles.”

Special purpose vehicles are designed for specific applications, like cement mixers, fire trucks and ambulances. They also include off-road vehicles for recreational activities.

Marikina Rep. Romero Quimbo, who chaired the ways and means committee in the previous Congress, said the proposed 100-percent increase in tax on low-priced cars would affect employees and other middle- income earners.

“Most cars are in the price range of P600,000 and P1.1 million. The smaller sport utility vehicles cost between P1.1 million and P1.5 million. These are the vehicles middle-class taxpayers buy,” he said.

The Cua bill, which was based largely on the Department of Finance’s proposed tax reform package, also seeks to impose a P6-tax on diesel, cooking gas, kerosene, and bunker fuel. It also aims to increase the levy on gasoline.

The House is expected to expedite consideration and passage of the bill since it is an administration- backed measure.