Published: Wednesday 13 December, 2017

Duterte Tax Reform + Excise Tax on Cars, Fuel, Drinks, etc Start Jan 1, 2018

Brace yourselves for new taxes which take effect on January 1, 2018. Excise tax on diesel and gasoline, cars, makeup, sugar-based drinks, tobacco, etc. will raise prices of consumer products. But it is not all bad news.

Excise tax philippines

Brace yourselves for new excise taxes to take effect on january 1, 2018! (Image source Daily Times)

Congress is set to ratify the tax reform today before it goes on a Christmas break starting December 15. After weeks of wrangling, the Senate and the House of Representatives have agreed on the final version of the tax reforms pushed by the Duterte administration – the Tax Reform for Acceleration and Inclusion (TRAIN) bill.

If, as expected, Congress ratifies the TRAIN bill today, it could be up for President Rodrigo Duterte’s signature before the end of the year after which it will take effect on January 1, 2018.

Among the new tax measures of TRAIN are the following:

Higher taxes on fuel and petroleum products

This will be implemented on a staggered basis: regular gasoline, unleaded gasoline and premium gasoline will be taxed an additional P7.00 per liter in 2018, P9.00 in 2019 and P10.00 starting 2020 onwards.

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Aside from gasoline, the following petroleum products will also have additional taxes: P2.50 for diesel, P3.00 for kerosene, P1.00 for LPG, P4.00 for Avgas, P7.00 for naphtha, P8.00 for refined fuel, P2.50 for bunker fuel, P8.00 for asphalts, P8.00 for lubricating oil, P8.00 for paraffin wax and P2.50 for petroleum coke.

Excise tax on automobiles

Excise tax on cars will mean more expensive brand new cars will cost much more. The higher the price of the automobile, the higher excise tax will be paid.

Additional 4% excise tax for brand new cars costing P600,00 and below; additional 10% excise tax on cars priced from P600,001 to P1 million; additional 20% excise tax on automobiles priced between P1 million and P4 million; and 50% additional excise tax on cars costing above P4 million!

Taxes on sweetened drinks and softdrinks

Taxes on sweetened drinks will also take effect next year. Under the TRAIN bill, a P6.00 tax per liter of beverages using caloric and noncaloric sweeteners will be implemented. Drinks using high fructose corn syrup meanwhile, such as softdrinks, will be levied a P12.00 tax per liter.

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Milk, coffee and natural fruit juices have been exempted from the TRAIN bill.

Excise tax on tobacco by 2018

The TRAIN bill has also levied higher excise tax on tobacco. The following is the staggered implementation:

P32.50 excise tax per pack from January 1, 2018 to June 30, 2018
P35.00 from July 1, 2018 to December 31, 2019
P37.50 from January 1, 2020 to December 31, 2021
P40.00 from January 1, 2022 to December 31, 2023
then a 4% increase annually thereafter.

A 5% tax on cosmetic procedures will also be implemented as well as additional taxes on coal and mining.

‘Lower’ personal income tax

But it is not all bad news. Included in the TRAIN bill is the passage of lower personal income tax for low income earners. Those earning P250,000 annually would be exempt from paying income taxes. However, those earning more will be taxed at staggered rates.

More good news: 13th month pay and other bonuses of up to P90,000 are exempt from taxes.

But, overall, all these tax measures are seen to add more burden to Filipinos. Despite pronouncements from its proponents, the TRAIN bill will have an adverse effect a majority on Pinoys.