Higher taxes threaten robust car sales forecasts


The government’s plan to raise taxes on automobiles will probably cut demand for cars and dampen robust outlook for the next four years, BMI Research said.

The Duterte administration aims to increase the excise tax on automobiles from 2 percent to 5 percent for those priced below P600,000; while a 20-percent tax will be slapped on vehicles priced between P600,000 and P1.1 million, 40-percent for those priced between P1.1 million to P2.1 million, and 60-percent for those priced above P2.1 million

Buses, trucks, cargo vans, jeeps and special purpose vehicles will be excluded from the planned tax increases.
The proposed tax changes will be part of the government’s tax reform package submitted to Congress this month.

“Should this vehicle tax reform package be passed by Congress, we believe it would lead to consumers pushing forward their car purchases ahead of vehicle prices increases, leading to a temporary surge in vehicle sales before the end of 2016,” research said.

BMI said once the higher taxes are implemented, its sales forecasts for 2017 to 2020 may no longer be achievable. It expects car sales to grow 23.5 percent next year, and by an average of 23 percent annually until 2020.

Dante Santos, first vice president of Mitsubishi Motors Phils, echoed BMI’s view.

“It will always dampen. Any change in structure of pricing affects the demand,” Santos said in an interview. “Even market acceptance will actually refocus. Acceptability of the pricing will have to be look into.”

Higher taxes will likely hit hard the middle-income consumers, who are more sensitive to car price changes compared to their wealthier counterparts, BMI said.


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  1. People will have to content themselves in buying small cars valued below 600K, so what is the difference as far as traffic is concerned? Mapupuno pa din ng sasakyan ang EDSA. More logical is the ‘No Garage-No Registration-No Car Policy.

  2. This is part of the tax reform package of the the Duterte administration. He will let the poor and middle class bleed with his tax reform program while the ultra rich keeps enjoying its perks and privileges. Is the kind of leader that we want? Speak out!

    • petronio c.tolentino on

      what we need is better infrastructure project, better quality of roads,efficient mass transport system likes more lrt system,railroad and no garage no registration no car policy because the govt. keeps on widening the roads that only ends up as parking area and worst of all graveyard of dilapidated vehicles