One of the country’s leading premium automotive brands is bracing for the anticipated impact of a House bill that seeks to raise taxes on luxury cars to as much as 75 percent in a bid for a ‘more equitable distribution of wealth.’
Specifically, House Bill No. 11465 proposes a 50-percent ad valorem tax on cars priced above P4 million up to P8 million, while vehicles priced above P8 million would be taxed at 75 percent.
The bill, filed by Marikina Rep. Miro Quimbo, could generate P3.91 billion in additional annual revenue for the government and is meant to impose higher taxes on Filipino consumers who have ‘greater disposable income.’
‘The proposed measure aims to achieve greater tax progressivity and promote a more equitable distribution of wealth since luxury and high-value goods are generally purchased by consumers with greater disposable income and capacity to pay,’ said Quimbo, who chairs the House Committee on Ways and Means.
‘This measure would enable the government to tap revenue sources that are readily identifiable and administratively accessible, while ensuring that goods and assets used for essential, livelihood, public transportation or productive sources are not unduly burdened,’ he added.
Should the bill come to fruition, Mercedes-Benz Philippines anticipates an across-the-board rise in premium car prices.
‘Higher taxes would translate to higher prices and, of course, revenue to the government. And once that’s decided, it impacts all of the premium brands. So, again, it levels the playing field,’ Mercedes-Benz Philippines business unit head Jun Cajayon said in a television interview with Bilyonaryo.
HB 11465 seeks to amend Sections 149 and 150 of the National Internal Revenue Code of 1997.
Under the proposal, only cars priced at P4 million and below will retain their existing tax rates.
Apart from luxury cars, the proposed measure also seeks to raise the excise on nonessential goods to 25 percent from 20 percent and expand the classification to include yachts, jet skis, speedboats, sailboats, motorboats, aircraft, planes, jets and helicopters acquired for pleasure, private use or sport.