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Wednesday, August 24, 2022

House Committee Approves To Impose Excise Tax On Pickup Trucks


Eyeing to buy a pickup truck? Better do that soon because they’re about to get more expensive. As if buyers have to contend with an unfavorable exchange rate and lack of supply due to the global parts shortage, the House committee on ways and means just approved a measure which would impose excise tax on pickup trucks.

As a refresher, pickup trucks are currently exempt from excise duties thanks to the current version of the TRAIN law which took effect in 2018. At the time, pickup trucks were exempted because these were seen as “workhorses for small business owners and professionals.”

However, Finance Secretary Benjamin Diokno noted that the DTI observed that pickup trucks rarely serve this function. Instead, they “serve as passenger, leisure, or sports utility vehicles or SUVs.”

With that in mind, Diokno sent a letter to House ways and means committee chair and Albay Representative Joey Salceda saying that car manufacturers are using this loophole and are circumventing the “law and purpose of their [pickup truck’s] exemption from the excise tax.”

Salceda, in turn, just approved a measure removing the excise tax exemption of pickup trucks.

If approved and signed into law, pickup trucks will be levied the same excise tax under TRAIN:
  • P 600,000 and below – 4 percent
  • Above P 600,000 to P 1,000,000 – 10 percent
  • Above P 1,000,000 to P 4,000,000 – 20 percent
  • Above P 4,000,000 – 50 percent
It’s unknown whether the final version of the bill will exempt single cab pickup trucks, like they were in the original form of the TRAIN law.

Regardless, if this bill is signed by the president or lapses into law, pickup trucks will soon see a considerable price increase, especially for fully-loaded, higher grade variants. This might affect one of the fastest growing segments in the auto industry, just as the growth of the mid-sized SUV segment waned when the TRAIN law was implemented.

The Department of Finance (DOF) had estimated additional tax collections would amount to P52.6 billion from 2022 to 2026 if the excise tax would be slapped on pick-up trucks.

With reporting from Inquirer.net

10 comments:

  1. "However, Finance Secretary Benjamin Diokno noted that the DTI observed that pickup trucks rarely serve this function. Instead, they “serve as passenger, leisure, or sports utility vehicles or SUVs.” '

    Let's be real here, when the excise tax exemption was approved, every other automaker except Ford did exactly that. Ford was in a class of one in the lifestyle truck segment (Wildtrak then later Raptor and F-150) then Toyota, Mitsubishi, and Nissan all followed suit with their TOTL trucks. Can't blame them though since they are in it to make money. In hindsight, the excise tax exemption was inevitably gonna be short-lived due to its exploitation. Now can we please get incentives and tax-breaks for EVs and Hybrids?

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  2. if that happens, not only brand-new pick-up trucks prices would increase but also second-hand prices. second hand dealers or sellers would say brand new are not affordable anymore but ours are still way below that.

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  3. many pick up trucks roaming around the metro were never meant to be workhorses anyway that's for sure....

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    1. Yeah pick up dimension adds contributes to traffic congeation

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  4. EVs & hybrids should get better tax breaks & exemptions. When can our Congressmen & senators issue the IRR for that law I wonder.

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    1. Ideally, that should be the next step after the removal of the pick-up excise tax exemption as a happy compromise between the government and the auto industry. However, this is unlikely to happen since the government only knows how to pocket that sweet tax money for themselves rather than making citizens' and businesses' lives better. At this point, hybrids and EV adaption will only happen in the country by carmakers forcing them on to the consumers because those are the only products they can sell in other countries. The consumer has no choice but to suck up the substantial increase in the barrier of entry of car ownership in the future. We have no choice to accept na wala nang pag-asa ang NEV and hybrid incentives because the government doesn't want to do it.

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    2. Nong epinasa ang previous tax train law ibinaba ng govt ang tax rate ng luxury cars at itinaas ang tax ng mga lower end vechicles n now ang pik up ang pinag iinitan. Etaas nlang nla ulit ang tax ng luxury cars kasi mga mayayaman ang bumibili

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  5. Hehe, Most parking areas are not designed to accomodate those anyways, they are too long and often clogs those precious spaces.

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  6. Well it's taxation time. Tax everywhere, anywhere but the rich can't be taxed heavier lol. (Heck their president can't even pay their own taxes.)

    I wish there could be tax breaks on eco vehicles or something like, one-time tax breaks for first-time car purchases lower than Php1M.

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