EVEN WITH CAR EXCISE TAX
Not even the excise tax imposed on automobiles, which will make the purchase of cars costlier than last year, will solve the traffic congestion problem in Metro Cebu.
Members of Cebu’s business community agree that an increase in car prices will not decrease the number of cars plying the roads and streets of Cebu as banks and other financial institutions have zero to low-interest rates and are generally “friendly” to those who apply for car loans.
President Rodrigo Duterte signed the Tax Reform for Acceleration and Inclusion (Train) law last December 19, 2017 imposing higher tax on fuel, tobacco, cosmetic surgery, tobacco, some sweetened beverages, and automobiles.
The law takes effect today (January 1).
“People who can afford cars will continue to buy cars. The major increases are in the luxury cars and that is a limited market,” said Cebu Business Club president Gordon Alan “Dondi” Joseph.
Joseph, who sits as executive committee chair and alternative co-chairperson of the Metro Cebu Development Coordinating Board (MCDCB) for the private sector, said the Train law is not aimed to address the traffic situation of a growing metropolis like Cebu.
He said what Cebu needs is a “real technical plan,” which will specifically address its problems such as traffic congestion.
Under the new Train law, the cost of cars worth up to P600,000 will increase by four percent and those over P600,000 to P1 million will increase by 10 percent.
A 20-percent increase will be imposed on cars over P1 million up to P4 million, while a 50-percent increase will be imposed on cars worth over P4 million.
Demand for electric cars is envisioned to rise this year and the following years given that these units are exempted from taxes.
The Toyota dealership in Mabolo is pushing for environment-friendly vehicles in 2018. (See separate story).
But Joseph said these cars need to be sold at reasonable prices.
“The infrastructure of these types of cars need to be put in place before sales surge. Infrastructure include charging stations. These new cars need to be put on the roads and sold at reasonable prices,” he told Cebu Daily News.
Car density in Central Visayas
Data from the Land Transportation Office in Central Visayas (LTO-7) show that there are a total of 771,430 motor vehicles registered in the region from January to November 2017.
These are based on records from Cebu, Bohol, Negros Oriental and Siquijor.
Of this number, 167,889 are new units consisting of cars (13,082), utility vehicles (17,888), sports utility vehicles (7,686), trucks (2,602), buses (35), motorcycles without side cars (125,624), motorcycles with side cars (693), tricycles (223) and trailers (56).
A total of 726,028 motor vehicles were registered under LTO-7 in 2016 where 163,587 were new units.
“Please note though that not all new units are operating within Cebu City. These are units sold by dealers regionwide and registered with us,” said LTO-7 Regional Director Alita Pulga.
Glenn Anthony Soco, president of Mandaue Chamber of Commerce and Industry, said the excise tax has no big impact on the ability of car buyers to purchase vehicles.
“The idea of the tax reform is to empower the lower and middle classes and to broaden the tax base for the government to earn more so that it can spend it on projects which most of us in the business community support,” said Soco.
He said banks and financial institutions normally accept and approve car loan applications if all documents and requirements are complete.
“The banks need the business so they will open facilities for people to afford the prices of cars. Car dealers need to unload the units so they will find ways to sell the cars,” explained Soco.
Need, not want
Asked if he will buy a car this year noting the increase in prices, Soco said he will purchase a unit based on the need and not want, a decision which Roy Silverio of Suzuki Auto South Cebu in Barangay Mambaling, will define in the first quarter sales of car dealers. (See separate story.)
Silverio said buyers will favor practical and versatile models over those with aesthetics qualities.
Soco said they are still on a “wait-and-see” mode as to how the Train law will affect businesses and consumers.
“My main concern is the effect of the increase in fuel prices on the prices of basic commodities. It might increase inflation. That is why each and every provision will have to be carefully monitored and thoroughly validated for businesses and consumers to have a win-win situation,” said Soco.
Motorcycles add to congestion
Pulga of LTO-7 said Cebu’s traffic situation is not only worsened by the presence of cars but also the higher number of motorcycles on Cebu’s streets.
“We have not seen a year where the number of vehicle registration decreased,” she told Cebu Daily News in a phone interview.
LTO-7 records show that there are 125,624 motorcycles without side cars, 693 motorcycles with side cars and 223 tricycles registered under the agency from January to November 2017.
Pulga said there are many opportunities for people to own a car or a motorcycle with dealers offering zero-percent interest, zero downpayment and longer payment schedule.
Pulga said Cebu’s traffic situation raised the popularity of motorcycles giving birth to the motorcycle ride booking service, Angkas.
“People with the desire to buy a car can afford a car because they will look for ways to buy that car. Many of the middle-class buyers will use these cars for businesses such as Uber or Grab. This is why the excise tax or higher prices on car will not affect the number of vehicles on our streets,” she said.
Pulga said people are smarter car buyers these days and they acknowledge that owning a vehicle is a necessity and not a luxury.