Read on for what you need to know about the new auto tax reform in the Philippines, and how much you need to earn on average if you\u2019re thinking about owning a decent car starting 2018.<\/p>\n
If you\u2019ve been following the news, you must have had a whiff of what\u2019s coming for the auto industry in the coming months. The Department of Finance (DoF), in its intention to pursue a more progressive tax measure, which also aims to curb Manila\u2019s worsening traffic condition, has proposed a new auto excise tax.<\/p>\n
To put it simply, the proposed tax reform was designed in such that it will reduce car ownership because of the significant add-on costs for buyers in taxes, and indirectly encourage the use of public transportation. Further, not only does the higher tax cover automobiles, but also petroleum products. It only means that anything related to car ownership in the Philippines will be getting more expensive soon, as the implementation will be staggered on a two-year period: 2018 to 2019.<\/p>\n
So, if you\u2019re thinking about buying yourself a new car, you probably need to rethink your ways and means to earn adequate money to prepare for the bills. Find out what you\u2019re getting into as we\u2019ve compiled the numbers that matter for different types of cars, as they\u2019re categorized into segments falling under the new auto excise structure.<\/p>\n
Under the new auto excise tax structure, vehicles priced up to Php 600,000 will be taxed 5% (increased from 2%). For vehicles priced Php 600,000 to 1 million, 20%; for those 1.1 to 2.1 million in value, 40%, and for vehicles priced 2.1 million and about, 60% auto excise tax is assigned.<\/p>\n
But since its announcement, both private and public sector proponents have been protesting this new tax structure. Several social media releases have even detailed the substantially higher standard retail prices (SRPs of known car models. The DoF thus amended their proposal on January 2017, incorporated into HB 4774 also known as the Tax Reform for Acceleration and Inclusion Bill Act. It was then that the DoF amended its proposal on January 17, 2017, which was then incorporated into the HB 4774, also known as the Tax Reform for Acceleration and Inclusion Bill Act.<\/p>\n
Here\u2019s an outline of the tax structure. Credit to Security Bank of the Philippines for the figures below.<\/p>\n
Net Manufacturer\u2019s \/ Importer\u2019s Selling Price Current Excise Tax Structure HB 4774 Auto Excise Tax Proposal <\/p>\n
Up to 600,000 <\/p>\n
2% <\/p>\n
4% <\/p>\n
Over 600,000 to 1.1 Million <\/p>\n
12,000 20% in excess of 600,000 <\/p>\n
24,000 40% in excess of 600,000 <\/p>\n
Over 1.1 Million to 2.1 Million <\/p>\n
112,000 40% in excess of 1.1 Million <\/p>\n
224,000 100% in excess of 1.1 Million <\/p>\n
Over 2.1 Million <\/p>\n
512,000 60% in excess of 2.1 Million <\/p>\n
1,224,000 200% in excess of 2.1 Million <\/p>\n
Larger vehicles and high-end cars selling at 1.1 million to 2.1 million will be taxed at a fixed excise of 224,000 (increased from 112,000) plus 100% (from 40%) of the amount in excess of 1.1 million, while those selling at over 2.1 million will be taxed a fixed excise of 1,224,000 (increased from 512,000) plus 200% of the amount in excess of 2.1 million.<\/p>\n
The best thing to do for interested car buyers is to just do the purchase now rather than later. But if it can\u2019t be avoided to carry out the purchase by next year, then here\u2019s what you\u2019re in for. Check out the SRPs of some popular car models, as outlined by Security Bank:<\/p>\n
Car Price Before Tax SRP (Current Excise Tax) SRP (DOF Excise Tax Proposal ) Increase in SRP <\/p>\n
Toyota Wigo <\/p>\n
463,725 <\/p>\n
473,000 <\/p>\n
486,912 <\/p>\n
13,912 <\/p>\n
Mitusbishi Mirage G4 <\/p>\n
561,765 <\/p>\n
573,000 <\/p>\n
589,853 <\/p>\n
16,853 <\/p>\n
Toyota Vios <\/p>\n
587,255 <\/p>\n
599,000 <\/p>\n
616,618 <\/p>\n
17,618 <\/p>\n
Ford Ecosport <\/p>\n
735,833 <\/p>\n
775,000 <\/p>\n
883,000 <\/p>\n
108,000 <\/p>\n
Honda Mobilio <\/p>\n
770,833 <\/p>\n
817,000 <\/p>\n
925,000 <\/p>\n
108,000 <\/p>\n
Ford Ranger <\/p>\n
830,833 <\/p>\n
889,000 <\/p>\n
997,000 <\/p>\n
108,000 <\/p>\n
Nissan Juke <\/p>\n
906,677 <\/p>\n
980,000 <\/p>\n
1,088,000 <\/p>\n
108,000 <\/p>\n
Mazda 3 <\/p>\n
921,667 <\/p>\n
998,000 <\/p>\n
1,106,000 <\/p>\n
108,000 <\/p>\n
Honda Civic <\/p>\n
996,667 <\/p>\n
1,088,000 <\/p>\n
1,196,000 <\/p>\n
108,000 <\/p>\n
Toyota Innova <\/p>\n
1,107,143 <\/p>\n
1,222,000 <\/p>\n
1,550,000 <\/p>\n
328,000 <\/p>\n
Chevrolet Trailblazer <\/p>\n
1,219,206 <\/p>\n
1,378,888 <\/p>\n
1,706,888 <\/p>\n
328,000 <\/p>\n
Toyota Fortuner <\/p>\n
1,228,571 <\/p>\n
1,392,000 <\/p>\n
1,720,000 <\/p>\n
328,000 <\/p>\n
Ford Everest <\/p>\n
1,476,429 <\/p>\n
1,739,000 <\/p>\n
2,067,000 <\/p>\n
328,000 <\/p>\n
Theoretical Car <\/p>\n
6,717,500 <\/p>\n
10,000,000 <\/p>\n
10,748,000 <\/p>\n
748,000 <\/p>\n
Note from Security Bank: Please be advised that the figures presented in this table may not be exact and is for educational purposes only.<\/p>\n
If you\u2019re doing some quick math now in your head, at the very least, you should be earning about Php 50,000 to afford a mid-range priced car and still be able to afford basic necessities. For example, the net SRP of a Honda Mobilio with the new auto excise tax is Php 950,000. This means a monthly expense of about Php 35,000 if you want to pay it off in two years, for example, under an auto loan scheme.<\/p>\n
There is some good news though: the proposed auto excise tax reform will not affect used or second-hand cars. Availing some current models of second-hand cars is still covered by some auto-financing institutions and banks, so you can still get a pretty good deal of paying only about say, Php 10,000 to Php 15,000 monthly for a decent second-hand car that\u2019s in the 2010 model and onwards.<\/p>\n
So, opt to amortize your car payments through a financing institution that offers friendly payment terms. This way you dodge the sky-high car prices come the auto excise tax reform implementation, and make good, practical use of your money.<\/p>\n","protected":false},"excerpt":{"rendered":"Read on for what you need to know about the new auto tax reform in the Philippines, and…\n","protected":false},"author":11,"featured_media":203,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8],"tags":[],"class_list":{"0":"post-202","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-growth"},"yoast_head":"\n