Carmakers who’ve been overly reliant on pickup trucks to boost their sales are in for a rude awakening as the Capital Market Efficiency Promotions Act (CMEPA) has been passed into law.
As we reported last April, this was deemed as a priority bill of the administration and would be one of the first to be tackled after the mid-term elections. That proved to be right as President Ferdinand “Bongbong” Marcos Jr. just signed it into law on May 29.
CMEPA’s objective is to simplify income tax on passive income making it fairer. However, it also amended several sections of the National Internal Revenue Code, including, you guessed it, the exemption of pickup trucks under the TRAIN or Tax Reform for Acceleration and Inclusion Law.
Although the president did veto three provisions of the bill, he did not veto the part that removed the excise tax exemption of pickup trucks.
Previously, pickup trucks were granted excise tax exemption under TRAIN for their crucial role in enabling small business owners to transport goods.
However, with the prevalence of lifestyle-oriented variants and models, the Department of Finance (DOF), supports it being taxed, as they observed that pickup trucks were being used primarily for passenger transport and other personal needs. Previously the DOF had previously argued for the return of the excise tax.
Under the agency’s proposal, taxes ranging from four to 50 percent will now be slapped on pickup trucks, depending on the net manufacturer's price or importer's selling price.
Carmakers have warned that CMEPA will indeed make pickup trucks more expensive as they’d be forced to pass on the additional tax to would-be consumers in the form of a price adjustment. The hikes could be as much as P 200,000 once the law takes effect and it could happen as early as June.
what is the effect on pure EV or hybrid pickups?
ReplyDeleteThere might be a slight adjustment. Remember, the excise tax is different from the import tariff.
DeleteImport tariff is dependent on which country the vehicle is sourced from and what the engine displacement is (if any).
Excise tax is levied on the landed cost...so it uses the import tariff as part of the computation.
In this regard, EV and hybrid pickup trucks will be slapped with no import tariff, but they'll be subject to excise tax based on the 4 to 50 percent range.
Could we see automakers downsize their pick-up offerings? I remember Toyota only started to sell more high-end Hilux variants just because of the exemption but now they will cost as much as an SUV.
ReplyDeleteElectrified pick-up excise tax is only half of the ICE pick-up excise tax
ReplyDeletedecongestion
ReplyDeleteThis law should not cover the base model pick ups. The 1m and below. Those are mostly fleet or for real business use.
ReplyDeleteI think the high-end trims are already overpriced for what are commonly inexpensive add-ons. Branded suspension pieces? Sure. But hundreds of thousands more than mid-range models? I don't think so.
ReplyDeleteIn short, the consumer will pay the additional tax.
ReplyDeleteThose brands have been increasing the price since 2019, base variants increased from 1.1M to 1.3~4M, and now they will increase the price again
ReplyDeleteToyota,Ford,Isuzu and Nissan are the ones gonna be heavily affected by this new taxation law
ReplyDeleteIt's about time. The real work horse is the L300.
ReplyDeleteHow would this affect the Tamaraw? It's a pickup AFAIK. It's also a real pickup work horse that's being used for businesses.
ReplyDeleteIf it's classified as a pickup truck, either its prices will go up slightly (remember, they're on the lowest scale of the excise tax bracket) or Toyota PH might have inputted the excise tax already in its SRP.
DeleteIf it's classified as a light-duty truck (like the L300), it might be different.
for me, this is purely driven by bad politics in the country. first, remember who benefited from lowering taxes on high end vehicles. then they implemented vintage vehicles tax breaks. so now that politicians realized their garages are not slated with pickup trucks, this... well, it may be just me and my imagination but i don't see pickup trucks along politicians' convoys - usually them good old innovas or for richer ones, grandias...
ReplyDeleteWill it also affect repossessed cars and other used cars?
ReplyDeleteThe srp of the glorified toyota tamaraw dropside would be affected then, yes?
ReplyDelete