DOF Might Impose Excise Tax On Pickups, Motorbikes

Pickups used to be exempted from the government's excise tax, but that may soon change as it aims to fund the country's debt.

Ever since the Tax Reform for Acceleration and Inclusion (TRAIN) law was imposed in 2018, almost every vehicle saw a price increase due to the implementation of the excise tax on vehicles. The keyword here is “almost” because pickups were exempted from the excise tax. Unfortunately, that’s probably going to change soon, and pickups may soon see a price increase.

Our country’s debt has ballooned over the years to fund the government’s “Build, Build, Build” program as well as the ongoing COVID-19 pandemic. As of March 2022, the country’s debt has risen to P12.68 trillion according to the Bureau of Treasury, and the government is seeking ways to raise funds to pay these debts.

Some of the proposals include the imposition of excise tax on single-use plastics, motorbikes as well as luxury goods. Unfortunately, the proposed Package 1, which aims to be implemented by 2023, sees the repeal of the excise tax exemption of pickup trucks. If that will be the case, expect vehicles like the Toyota Hilux, Nissan Navara, and Mazda BT-50 to see a price increase and therefore lower sales of these vehicles by 2023.

To make matters more expensive, the Motor Vehicle User’s Charge (MVUC), which under Package 1 says that it will now come with a single and unitary rate based on the gross vehicle weight of all motor vehicles. With this in mind, the annual registration of your vehicle will definitely become more expensive.

With the repeal of the excise tax on pickups and the imposition of excise tax on motorbikes, the government expects to collect P19.2 billion from these. On the other hand, the single and unitary rate of the MVUC will provide the government with an additional P38.3 billion in funds.

For now, all of these are still under the proposal stage, but if this does come into fruition, owning a pickup and motorbike, as well as registering your vehicle, will cost more by 2023.

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