New taxes seen lower on income, higher on cars

The government’s tax reform package passed a major hurdle when the ways and means committee of the House of Representatives voted on Wednesday to approve a version of the measure that could make auto makers heave a sigh of relief.

The committee, chaired by Quirino Rep. Dakila Cua, voted 17-3, with four abstentions, to pass the proposed “Tax Reform for Acceleration and Inclusion Bill,” a priority piece of legislation by the Department of Finance.

The bill seeks to lower personal income taxes from 32 percent to 25 percent, except for high-income individuals, expand the value-added tax base,  and raise excise taxes on refined petroleum products and select types of vehicles and restructure the alcohol tax.

The auto industry had been bracing for the impact of the tax reform package amid talk that it could push car prices beyond the means of buyers.

The version, however, tempered the increases in auto excise tax. Although it maintained largely the same provisions in a previous version a few changes were made including a lower rate of increase.

The new version of the bill now expands the number of tax brackets from four to five.

The new proposed measure appeared to have adopted some proposals made by the Chamber of Automotive Manufacturers of the Philippines (Campi) and Association of Vehicle Importers and Distributors (Avid) in a position paper submitted to Congress in February.

The first bracket of the bill would raise excise tax on cars costing up to P600,000 from two to three percent in 2018, a proposal made by the auto industry. The tax rate, however, would increase to four percent in 2019.

Rep. Antonio Tinio, of the militant party-list group ACT Teachers, said he voted no to the measure “because overall, it’s antipoor.”

He said excise tax on fuels—liquefied petroleum gas, kerosene and gasoline—would hit the poor hardest.

Another militant lawmaker, Rep. Sarah Elago, of Kabataan party-list group, also opposed the measure.

“Personal income tax may have been lowered, but it’s offset by new taxes! Let us guard this and deeply study progressive reforms, especially in taxation administration,” Elago said in a Facebook post.