TRAIN hits car prices

Taxation structure that governs the tax on new vehicles is no exception to the newly passed Tax Reform for Acceleration and Inclusion Law

In the previous excise tax for vehicles, the Cost of Goods Sold (COGS) is used as a basis in the value-based system which shifted from an engine displacement-based system. This system has been used for 20 years.

Electric vehicles are exempted from TRAIN for environmental incentives, as well as pickup trucks for agricultural tenacities. Tax on hybrid counterparts are cut in half in comparison to the non-hybrids.

Suggested retail prices (SRP) of pickup trucks will benefit since it could drop as much as 20 percent for leisure truck models. Mainstream pickups such as the Ford Ranger Wildtrak and Toyota Hillux are anticipating a decline of about 10 percent.

In the hybrid category, various Lexus models and other luxury hybrids in the 4-million peso range will see its biggest decline in prices. However, unfortunately, more mainstream models such as Prius show no sign of price drop.

TRAIN’s effects are felt drastically as it hits cars such as the Honda Civic RS Turbo, Toyota Corolla Altis 2.0 V, vehicles that are priced in the range of P1.4 million and P2 million.

Vehicles below P1.4 million (as of December 2017) are expected to have a one-digit price increase and others above P2.5 million (as of December 2017) will actually see a drop with the “trench” being in the range of

Nissan Parol Royales and Land Cruisers.

TRAIN’s effects will not be significant to others as it is for everyone else. If you are thinking of buying a car within the range of P1.4 million and P2 million, now is the best time to put your plans into work, since most haven’t implemented their new prices yet. These are the vehicles that are most likely to increase their prices to cover the loss under the new tax system.

On the other hand, if you are intending to get a car like Audi, Mercedes-Benz, BMW, or Volvo, it might be good to halt the idea of purchasing for a while.