Several certain products on the market such as sugar, gas and cars have now higher prices than the past year. This is due to the Excise Tax imposed on these products, an additional tax on top of the Value Added Tax (VAT).
One time last January, we went on a store to buy a particular 1.5-liter soft drink which usually costs about ₱50. That time, we don’t know about the TRAIN Law. We were surprised when we found out in the cashier that it is now ₱75! There are also increase of prices in juice drinks, energy drinks and other products.
The TRAIN Law aims to uplift millions Filipinos from the poverty line as well as to generate more revenue to fund various infrastructures and government projects. You may ask, with these increase of prices, how come its beneficial to the poor?
Well, it does have some effect if you look at it on just the price increase. However, this is just the first package of the comprehensive tax reform program by the government. If you take this TRAIN Law on a higher viewpoint as one package, most people would say that the additional take-home pay due to the exemption or decrease in individual income tax is more than enough to “offset” the price increase of certain products.
3 Common Products with Price Increase Due to Excise Taxes
1. Sugar-Sweetened Beverages Excise Tax
Sugar-sweetened beverages are products that contains caloric, non-caloric sweeteners or high-fructose corn syrup or any combinations thereof. These includes but not limited to sweetened juice drinks, sweetened tea, all carbonated beverages, flavored water, energy and sports drinks.
Under the TRAIN Law, an excise tax of ₱6 per liter is imposed on drinks that contains caloric or non-caloric sweeteners, while ₱12 per liter for beverages that contains high fructose corn syrup.
However, 3-in-1 coffee, milk and 100% natural fruit/vegetable juice are exempted in excise tax.
The World Health Organization even commended the Philippine government for imposing excise tax in sugar-sweetened drinks. This may help decrease diabetes and obesity in the Philippines while raising funds for health-related programs and services.
2. Petroleum Products Excise Tax
There is also an increase of prices in petroleum products due to the imposed excise taxes. For diesel products from ₱0.00, there shall be an additional excise tax worth ₱2.50 per liter this 2018, ₱4.50/liter in 2019 and ₱6.00/liter on 2020.
On the other hand, for gasoline from ₱4.35/liter last year there shall be new excise tax worth ₱7.00 per liter this 2018, ₱9/liter in 2019 and ₱10/liter in 2020.
It is said that the rich families consumes 50% of the total fuel consumption in the country. This means the rich people are much more affected by the increase of prices in petroleum products.
3. Automobiles Excise Tax
Meanwhile, there is a huge increase on prices of automobiles. Low-priced cars are taxed with lower rates while expensive or luxury cars are taxed at higher rates. The tax rate is from 4% up to a whopping 50% of the car’s price!
Check out the table below as reference to the old rates and the new excise tax rates on automobiles.
Old Automobile Rates
| Manufacturer’s/Importer’s Selling Price | Excise Tax Rate |
|---|---|
| Up to ₱600,000 | 2% |
| Over ₱600,000 to 1.1 Million | ₱12,000 + 20% of the excess over ₱600,000 |
| Over ₱1.1 Million to ₱2.1 Million | ₱112,000 + 40% of the excess over ₱1.1 Million |
| Over ₱2.1 Million | ₱512,000 + 60% of the excess over ₱2.1 Million |
TRAIN Rates
| Manufacturer’s/Importer’s Selling Price | Excise Tax Rate |
|---|---|
| Up to ₱600,000 | 4% |
| Over ₱600,000 to 1 Million | 10% |
| Over ₱1 Million to ₱4 Million | 20% |
| Over ₱4 Million | 50% |
For a better presentation, ABS-CBN TRAIN Law Infographic.
However, electric vehicles are exempted in automobile excise tax. This is to encourage greener and cleaner transportation. Moreover, pick-up trucks are also exempted since they are mostly used by entrepreneurs in commercial and agricultural businesses.
There are still several products affected by excise taxes under the TRAIN Law such as tobacco and cosmetic products, coal and other minerals. What are your thoughts about these? Do let us know in the comment section.
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