This is Probably the Best Solution to the Traffic Problem

Photo credits to Roy Patrick Tan

The usual solutions that our government uses to solve the traffic problem are ‘build more infrastructures such as roads and bridges’, and ‘ban these type of vehicles in certain duration of time’.

Those two are the most famous short-term solutions that the preceding administrations as well as this present Duterte administration is undertaking.

Nevertheless, I commend the Digong administration for finally “mentioning” the subject of excise tax on new vehicles, that the previous administrations failed to even consider it.

“What is an excise tax?”, you may ask. It’s an indirect tax charged on the sale of a particular good. Indirect means the tax is not directly paid by the buyer. The BIR stamps the tax on the car maker or car seller, who passes the tax onto the buyer by including it in the product’s price, thus increasing the final price.

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If there is an excise tax on a vehicle, it would have an additional cost of P400,000 to P600,000. If for example, the present price of a Mitsubishi Lancer is P500,000 (without excise tax), but with excise tax it would cost about 1 million pesos.

When the price of vehicles increases, the number of buyers decreases. Thus, it would gradually lessen the number of vehicles plying on the roads, and would result in less traffic.

Southeast Asian neighbor Singapore imposes excise tax on vehicles to regulate the traffic because their land area is limited.

House deputy speaker Raneo Abu is pleased with the idea of excise tax, he said, “Dahil ang lagi kong iniisip talaga, kahit na tayo ay magparami ng magparami ng kalye kung hindi naman natin ire-regulate ‘yung pagbili ng sasakyan, ganya’t ganyan pa rin ang problema natin”.

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However, House ways and means committee chairman Dakila Carlo Cua has some reservations, “If you ask me, I do not 100 percent subscribe to that notion because this issue is limited to the urban areas like Metro Manila, Cebu and a few other parts of the country. In places like Quirino or maybe Mindoro, traffic is not much of a problem. So we would like also for the people who are in the provinces to have the option to purchase a vehicle at an affordable package”.

If the implementation of excise tax is only in selected cities, this is a loophole that some buyers would take advantage of. They will buy it in, say Mindoro, and bring the vehicle to Manila or Cebu.

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So what do you think? Is this excise tax on new vehicles a good idea to solve the traffic problem?

Anong masasabi mo? 🙂

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