Proposed DOF Tax reforms could increase Tax on pick-ups, motorcycles, vintage cars and fuel
It’s no secret that the country has a rising debt problem, and is one of the major issues that the incoming administration has to face. The Department of Finance (DOF) has what they call the “Fiscal Consolidation and Resource Mobilization Plan”, a presentation that has hit “breaking news status” recently. It is basically a tax reform proposal, which includes a wide range of industries, including the automotive one.
It is said that this proposal is to help aid our country to climb out of its debt problems, which were caused by the Covid-19 pandemic among other factors.
What caught our attention though is what they have in mind for the automotive industry.
The DOF tax reform presentation is said to include the following:
- A reform of the Motor Vehicle User’s Charge (MVUC)
- The repeal of excise tax exemption on pickups
- The imposition of excise taxes on motorcycles
- A 1 Peso hike on Fuel Excise Tax
- An expansion of coverage of Tax on non-essential goods, including vintage cars.
- Carbon taxation (Tax on carbon emissions)
According to the DOF presentation, these tax reform policies are part of a “package” that could kick in sometime in 2023. The DOF says that adjusting the MVUC could result in an extra PHP 38.3 billion of income for the government each year while removing the excise tax exemption for trucks, will give the next administration an additional PHP 19.2 billion in annual income.
Further details are still pending on the Carbon Taxation, Fuel Excise Tax Hike, and Vintage vehicle tax, the DOF presentation says those are still “currently undergoing further study”.
So what does this all mean? Nothing has been set in stone as of yet, everything is still under consideration pending the new administration. However, If these tax reforms do kick in at some point, the impact will surely be felt by every motorist.
