Car Tax Hikes Loom in the Philippines
February 20, 2017 Taxation in Philippines
Over the course of the last week significant controversy has arisen over a proposal by the government of the Philippines to introduce a new tax on the sale of automobiles in the country.
The new tax was proposed as part of a wider plan by the government to shift the national tax system to a low-rate wide-base system, which would see taxes charged at a lower rate but on a greater number of items and transactions.
The government hopes that by raising the taxes on cars, it will be able to reduce the taxes levied on personal incomes.
Currently the taxes on the sale of cars in the Philippines are staggered, with a base fee determined by the value of the car, and an additional proportional charge, also set by the value of the car.
The base fee and the proportional charge increase as the value of the vehicle rises.
Under the new proposal, both the set fee and the proportional charge are set to double.
The proposal has not been met with unanimous support, with Luis Campos Jr., representative for Makati City, claiming that the new tax will dampen the desire of locals to purchase a vehicle.
It is further claimed that a reduced demand for cars in the country will heavily impact the vehicle industry, which currently accounts for approximately 4 percent of the national GDP.