EDITOR’S NOTE (2): We simulate the prices of 42 vehicles under the final bicameral version of the TRAIN bill. Read it here. (12/14/2017).
EDITOR’S NOTE (1): The House of Representatives and Senate have agreed on a compromised version of the new vehicle excise tax which excludes pick-up trucks and EVs. See the story here (12/12/2017).
The Rappler reports that The Philippine Senate has approved on the third and final reading the proposed Tax Reform for Acceleration and Inclusion or TRAIN Bill which reduces the personal income tax but raises the excise tax on items such as new car purchases and fuel.
Voting 17-1, with Senator Risa Hontiveros opposing, Senate Bill 1592 has been passed. Now that the Senate has come up with their final version, it will now head to a bicameral conference committee with the House of Representatives in order to come up with a “combined version.”
The Senate version of the TRAIN Bill sees a much simpler excise tax levied on new vehicles. Under the finalized Senate version, vehicles with a Net Manufacturing Price of P 1 Million (P 1,000,000) will be taxed 10 percent while those costing more than P 1 Million (P 1,000,000) will be taxed 20 percent. This is a far cry from the proposed five-tier, two-phase implementation.
Hybrid and electric vehicles are exempted from taxation.
Illustrating the difference of 7 vehicles under the current excise tax structure, original Senate version, and final Senate version, the effect of the finalized Senate bill is made clearer when comparing the current SRP and the Final Senate version SRP (note: all prices are estimates and based on the same assumptions as before):
- Suzuki Alto 800
Current SRP: P 398,000
September 2017 Version: ~ P 405,804
Final Senate Version: ~ P 429,216
Difference: + P 31,216
- Toyota Vios 1.5 G
Current SRP: P 925,000
September 2017 Version: ~ P 955,299
Final Senate Version: ~ P 973,595
Difference: + P 48,595
- Honda Civic 1.8 E
Current SRP: P 1,115,000
September 2017 Version: ~ P 1,171,299
Final Senate Version: ~ P 1,149,595
Difference: + P 34,595
- Mazda3 2.0 Speed Hatchback
Current SRP: P 1,398,000
September 2017 Version: ~ P 1,489,674
Final Senate Version: ~ P 1,409,012
Difference: + P 11,012
- Ford Everest 2.2 Titanium 2WD
Current SRP: P 1,839,000
September 2017 Version: ~ P 1,980,936
Final Senate Version: ~ P 1,938,398
Difference: + P 99,398
- BMW X1 xDrive 20d xLine
Current SRP: P 3,340,000
September 2017 Version: ~ P 3,642,657
Final Senate Version: ~ P 3,224,969
Difference: - P 115,031
- Toyota Land Cruiser LC200 Premium
Current SRP: P 4,930,000
September 2017 Version: ~ P 5,528,833
Final Senate Version: ~ P 4,420,068
Difference: - P 509,932
In addition to increasing the excise tax on new vehicles, the TRAIN also levies an increase in tax for petroleum products. That said, the rates are lower than that of the House.
The approved Senate version sees diesel with a P 1.75 per liter tax in 2018, P 2.00 in 2019, and P 2.25 in 2020. LPG gets a P 1.00 per liter in tax while kerosene is excluded. No word in the Rappler report if the final Senate version changed the proposed levy on gasoline. If there’s no change, it will be P 6.00 in 2018, P 8.00 in 2019, and P 10.00 in 2020.
Although the Department of Finance set a December 11 deadline to have Duterte sign the TRAIN into law (the target implementation date is January 1, 2018), in an interview with Rappler, Senate Minority Leader Franklin Drilon says he “expects a difficult time at the bicameral conference committee due to the polarizing provisions in the two versions.” The bicameral conference is slated for November 30.
More on this as it develops.