The Finance Department on Tuesday said the proposal to impose an automotive excise tax aims to help ease traffic in the Philippines as well as generate revenues for the government.
It said it was pushing for the restructuring of the excise tax on vehicles to partly ensure the financial sustainability of the government’s 10-point socio-economic agenda on inclusive growth and deal with the worsening traffic problem in Metro Manila and other highly congested urban centers.
Finance Secretary Carlos Dominguez III said the implementation of the vehicle tax increase could begin in 2018, giving the Duterte administration enough time to start fixing the problems plaguing the country’s rail transit system.
A higher tax will encourage people to use mass transport rather than using private cars.
“If this thing is going to pass, it will probably be effective in 2018. So we have a year to fix it. So there, that’s the reason. By the way, we are not imposing this merely to make life hard for people. We are imposing this to finance [our] infrastructure needs,” said Dominguez.
Dominguez said the progressive tax on automobiles would discourage the purchase of new cars, which, in turn, ease traffic congestion and reduce air pollution.
“What’s the point of buying a new car and not moving in the streets? That point of the matter is we want to direct the people to go to public transport, and we are making big investments in public transport, particularly the bus rapid transit system, and we’re fixing up the trains, whose maintenance has been neglected over the years,” Dominguez said.
“So we are going to make public transport more available. We have to discourage new cars because just look at the traffic. It’s not moving.”
Finance in September submitted to Congress the first package under its proposed comprehensive tax reform program.
The first package covers the reduction in personal income tax rates, along with offsetting measures, that aim to expand the value-added tax base, adjust the excise tax on petroleum products and index these to inflation, and restructure the excise tax on automobiles, except for buses, trucks, cargo vans, jeepneys, single cab chassis, and special-purpose vehicles.