Bill seeks steep tax hike on luxury cars

Luxury vehicles costing more than ₱8 million could face a 75-percent excise tax under a new House proposal that seeks to make the country’s tax system more progressive while raising additional revenue from high-value consumption.

Marikina 2nd District Rep. Miro Quimbo filed House Bill No. 11465 on Wednesday, proposing changes to the excise tax provisions covering automobiles and other non-essential goods under the National Internal Revenue Code of 1997.

Vehicles priced above ₱4 million but not exceeding ₱8 million would be subject to a 50-percent ad valorem tax, while those costing more than ₱8 million would carry a 75-percent rate. Cars priced at ₱4 million and below would retain their existing rates.

Quimbo, chair of the House Ways and Means Committee, estimates that the higher automobile taxes could generate an additional ₱3.91 billion in annual government revenue.

“The proposed measure aims to achieve greater tax progressivity and promote a more equitable distribution of wealth since luxury and high-value goods are generally purchased by consumers with greater disposable income and capacity to pay,” Quimbo said.

He said the measure could also discourage conspicuous consumption and encourage households to channel more resources toward savings, investments and other productive spending.

The bill separately proposes raising the excise tax on non-essential goods from 20 percent to 25 percent and expanding its coverage to pleasure or private-use yachts, jet skis, speedboats, sailboats, motorboats, aircraft, planes, jets and helicopters.

Perfumes and toilet waters, however, would be removed from the list of products subject to the tax.

Quimbo said the additional revenues could help fund government priority programs without placing additional tax pressure on ordinary taxpayers.

“Strengthening the taxation of luxury consumption constitutes a practical means of enhancing the progressivity of the Philippine tax system,” he said.

“This measure would enable the Government to tap revenue sources that are readily identifiable and administratively accessible, while ensuring that goods and assets used for essential, livelihood, public transportation, or productive sources are not unduly burdened,” he added.