Toyota worries over higher vehicle taxes

Toyota Motor Philippines (TMP), which is in charge of the Toyota and the Lexus luxury brands in the country, has expressed concern on the impact of a proposal to impose higher taxes on vehicles.

In a recent interview, TMP vice chairman and Lexus Manila chairman Alfred Ty said “the concern is on the luxury market.”

“The proposed program is quite drastic,” Ty said. “We have to consider the future of these importers. It’s not just us. In totality, it (luxury vehicle segment) doesn’t even take one percent of the car sales.”

Lexus Manila, a subsidiary of TMP, is among the country’s top luxury car companies.

Ty said Japanese makers are already affected by the foreign exchange impact of the peso and yen to the dollar. “This alone will necessitate some price recovery,” he said.

The Duterte administration has proposed a string of measures to raise taxes contained in its Comprehensive Tax Reform Program (CTRP).

The first part of the CTRP contains a plan to raise taxes on vehicles which could double the price of luxury cars.

One proposal is contained in Article VI of House Bill 4774 authored by Quirino Rep. Dakila Carlo Cua.

Under Cua’s proposal, the excise tax for automobiles shall be raised to four percent from the present two percent if the net manufacturer’s price/ importer’s selling price is up to P600,000.

If the price is P600,000 to P1.1 million, the tax rate shall be P24,000 plus 40 percent of value in excess of P600,000. The present tax rate is P12,000 plus 20 percent of value.

If the price is over P1.1 million to P2.1 million, the tax rate shall be P224,000 plus 100 percent of value in excess of P1.1 million. This is compared to the present tax rate of P112,000 plus 40 percent of value in excess of P1.1 million.

If the price is P2.1 million and above, the tax rate shall be P1.224 million plus 200 percent of value in excess of P2.1 million. The present rate is P512,000 plus 60 percent of value in excess of P2.1 million.

TMP through the Chamber of Automotive Manufacturers of the Philippines has been seeking for a compromise on the auto tax proposal.