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Solons vow review of ad valorem tax on new cars

THE chairman of the House committee on ways and means on Monday vowed to review a Department of Finance proposal to impose a 40 percent ad valorem tax, or an additional P480,000, for every vehicle priced at P1.2 million.

At a news conference, Quirino Rep. Dakila Cua, the panel chairman, said his committee is deliberating on the DoF proposal that was included in the tax reform package intended to address traffic congestion.

Cua also advised the potential car buyers to already purchase new cars before Congress is able to pass the measure.

“That is a part of our reaction to traffic crisis. If Congress will pass it, better to purchase a vehicle before Congress passes [a law on it],” Cua told reporters after Deputy Speaker and Camarines Sur Rep. Rolando Andaya Jr. asked him about the matter.

Cua said the House would have to study the viability of the said proposal of the DoF.

House Deputy Speaker and Batangas Rep. Raneo Abu backed the proposal to reduce the number of vehicles causing traffic gridlock in major cities in the country as he urged the government to come up with a creative solution to the problem.

“We support the proposal if it will address the traffic problem,” Abu, author of House Bill 1991 seeking to regulate the sale of motor vehicles by requiring proof of parking space or facility in a bid to case traffic in some key cities.

Abu’s “Proof of Parking Space Act” is only applicable in Metro Manila, Metro Cebu, Metro Davao and other highly urbanized cities.

The bill of Abu provides that a buyer of motor vehicle must first present a proof of parking space before he or she be allowed to purchase a motor vehicle and register with the Land Transportation Office.

For his part, Andaya also backed the proposal, but stressed the ad valorem tax should not be high.

“I am supportive of the measure, but the amount of tax to be imposed under the proposal is too much. There should be an adjustment,” Andaya said.

The DoF proposal on new vehicles provides that there shall be levied, assessed and collected an ad valorem tax on automobiles based on the manufacturer’s or importer’s selling price, net of excise and value added tax (VAT).

Under the measure, if the net manufacturer’s price/importer’s selling price is P600,000 the excise tax will be 5 percent. 

If the net manufacturer’s price importer’s selling price is P600,000 to P1.1 million the excise will be 20 percent of net manufacturing/importation price.

If the net manufacturer’s price importer’s selling price is P1.1 million to P2.1 million the excise will be 40 percent of net manufacturing/importation price. If the net manufacturer’s price importer’s selling price is P2.1 million the excise will be 60 percent of net manufacturing/importation price.

The bill said the brackets reflecting the manufacturer’s price or importer’s selling price, net of excise and VAT, will be indexed by the secretary of Finance once every two years if the change in the exchange rate of the Philippine peso against the US dollar is more than 10 percent from the date of effectivity of this act.

Topics: Department of Finance proposal , Rep. Dakila Cua
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