First, a few words about this thing they call "excise tax" and how it applies to the sale of cars: An excise tax, according to the Bureau of Internal Revenue, is "a tax on the production, sale, or consumption of a commodity in a country. It is applied on goods manufactured or produced in the Philippines for domestic sale or consumption or for any other disposition...and on imported goods." The official name for this tax, which will take effect in January 2018, is House Bill 5636, or Tax Reform for Acceleration and Inclusion (TRAIN).
The products that will be subject to the tax are as follows: alcohol, tobacco, petroleum, mineral products. Cars fall under "miscellaneous products." The general effect of the excise tax on new cars is that they will cost more, obviously. We will not go into specific rates here, but the key takeaway is this: price increases on cars will be much, much higher on luxury cars, those costing P8 million and above. As you go lower down the price bracket, so is the tax imposed.
There is another tax measure that is often cited in conjunction with the excise tax to somehow soften its blow: the income tax cuts under the proposed comprehensive tax reform program. What this means essentially is that take home pay will be higher (except for the million-a-month earners, who will actually pay more taxes. But the increase is so minuscule by their standards they must be laughing hard at the joke). This creates a curious effect on the auto industry: While cars will be generally more expensive, people—most especially those in the middle income bracket—will actually find themselves with more purchasing power for cars.
Which brings us to the reason why the Suzuki Celerio is here. If we take this tax give-and-take to its logical conclusion, the smartest thing to do for anyone about to buy their first car is to head straight to the small category, where excise tax is lowest, and trust that a bank loan approval is just an hour away because, well, that's how car dealers keep the sales coming.
There are several options in the small cars market, but the Celerio is turning out to be a best buy for one simple reason: it offers more space. You wouldn't think it's possible to say compact car and more space in a single breath, but Celerio actually achieves in doing it. As far as sales pitches go, more space in a very small car is gold.
And then there is the price. Right now the manual version is at P538,000 and the CVT is at P569,000. It's safe to assume that Suzuki will be juggling some numbers to keep it under the P600,000 mark after the excise tax kicks in. Bottomline: if you have more money and it's still that cheap, it’s worth buying.
Photography Christian Halili courtesy of Top Gear Philippines
This story was originally published in the October 2017 issue of FHM Philippines. For more on this story, grab a copy of the magazine.
Minor edits were made by the FHM.com.ph editors.
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