OIL and automobile excise rates are proposed to be increased in line with the tax reform measure, said Finance Strategy and Economics and Results Group undersecretary Karl Kendrick Chua during the Tax Reform Roadshow at Microtel Inn & Suites last Friday.
Currently, there is zero excise rates for diesel and essentials while we have a P4.35 excise rates for gas and nonessentials. The tax reform measure proposes that a staggered increase of P6 will be implemented to diesel and essentials. P3 will be implemented on July 2017, once the bill is passed and approved, another P2 next year and an additional P1 on 2019. A P6.24 excise tax for diesel is expected by 2020 considering the annual indexation of 4 percent starting that year, except if Dubai crude exceeds 100 US Dollars per barrel.
“Immediately, we wanted P6 increase. Why P6? It is because this was the amount that was eroded for the last 20 years wherein we did not adjust the oil excise,” said Chua.
A P10 excise rate is proposed for gas and nonessentials by 2019. With the P4.35 existing excise rate, the bill proposes its increase to P7 by July 2017, to P9 by next year before it would reach the P10 mark on 2019. Still because of the four percent annual indexation, a P10.40 gas excise rate is expected by 2020 with this proposal.
Diesel per liter is at P32 as of January 2017, but the bill proposes its staggered increase to P38.24 by 2020. Gas, which is currently at P46 per liter as of last month, is proposed to be increased to P56.40 by 2020.
“Oil excise is a highly progressive tax since those who consume more will pay more tax compared to those who consume less,” said Chua in his presentation.
An increase of four percent auto excise rate from two percent was also proposed in line with the tax reform. Using the proposed auto excise rates, a Toyota Vios 1.3 Base with a current suggested retail price (SRP) of P599,000 have a proposed SRP of 611,796 or a 12,796 change in SRP.
Toyota Innova 2.0 J with a current SRP of P919,000 is proposed to increase by P983,465 with more than P64,000 change in SRP. The more expensive the automobile is, the higher the proposed change in SRP will be.
“Additional revenues raised through this excise tax will be used to improve traffic management solutions, and fund climate change-resilient infrastructure,” presented Chua.
