Luxury vehicles could become significantly more expensive in the Philippines if a new House measure seeking higher excise taxes on high-value automobiles becomes law.

House Bill No. 11465, filed by Marikina 2nd District Rep. Miro Quimbo on Wednesday, proposes a 50% ad valorem tax on vehicles priced above PHP 4 million up to PHP 8 million, while vehicles priced above PHP 8 million would face a 75% tax.

Quimbo, who chairs the House Ways and Means Committee, estimates that the proposed higher excise taxes on luxury vehicles could generate nearly PHP 4 billion in additional 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.

Ad valorem tax is calculated as a percentage of the value of the taxable item. For vehicles, the proposed 50% and 75% rates would therefore be applied to vehicles falling within the corresponding price brackets.

An example of a seized luxury vehicle | Photo courtesy of Bureau of Customs

Quimbo said the higher tax on expensive vehicles could also discourage what he described as conspicuous consumption and encourage consumers to direct more of their resources toward savings, investments or other productive spending.

The bill would also increase the excise tax on non-essential goods under Section 150 from 20% to 25%. The expanded coverage would expressly include yachts, jet skis, speedboats, sailboats, motorboats, aircraft, planes, jets and helicopters acquired for pleasure, private use or sport.

At the same time, HB 11465 proposes removing perfumes and toilet waters (scented body fragrances, splashes and colognes) from the list of goods subject to the tax under Section 150.

Quimbo said the additional revenue could be used to support government priority programs without increasing the tax burden on ordinary taxpayers.

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

The proposed changes remain subject to the legislative process and would need to be approved by Congress before they could take effect.