The latest Senate version of the first comprehensive tax reform package is proposing that the excise tax on cars would have a higher rate next year from what was passed in the Lower House last May, a move which raises prices beyond the comforts of the automobile industry.
Senate Bill (SB) 1592, which is supported by 17 out of 24 senators, wants to impose new excise tax rates starting January next year that are relatively higher than the increases proposed in House Bill (HB) 5636, the Lower House’s version of the first package.
Moreover, the Senate’s version does away with the proposed two-year implementation period in HB 5636, opting instead to slap the higher prices immediately by January 2018.
While these increases under SB 1592 are higher than the scheduled rates for 2018, these are still relatively lower than what would be imposed in 2019 under the House bill.
The Senate’s latest version of the first tax reform package divides the tax brackets into five. HB 5636 also divided its version into five brackets.
In the first bracket of the Senate bill, the net manufacturer’s or importer’s selling price of cars valued up to P600,000 would be slapped with a 4-percent excise tax rate, higher than the 2 percent in the current tax system. In HB 5636, the first bracket would have only a 3-percent excise tax rate next year, before raising it to 4 percent in 2019.
Meanwhile, cars with net prices valued between P600,000 and P1.1 million would be slapped with P24,000 on top of the 35 percent of the value exceeding P600,000, the Senate bill read.