July 25th, 2023
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district), principal author of House Bill No. 376, says that the Motor Vehicle Road Users’ Tax proposal that the House tax committee approved today, will raise more funds for public transport modernization, while reducing rates for vehicles for-hire and exempting motorcycles and tricycles from the charge.
The measure was identified as a priority measure during the 2nd State of the Nation Address.
“House Bill No. 376 seeks to amend Republic Act No. 8794 or the Motor Vehicle User’s Charge, enacted more than two decades ago, and impose a Motor Vehicle Road User’s Tax or MVRUT instead,” Salceda said.
“The bill is based on the MVRUT bill passed on Third and Final reading in the 18th Congress, after thorough deliberation and consultation with stakeholders and industry experts by our Committee. The bill is also part of the priorities of the Development Budget Coordination Committee, estimating that this will result in almost P151 billion from 2024 to 2027 to the government,” Salceda added.
“As a backgrounder, the President has the authority to adjust the MVUC rates annually as stipulated in RA No. 8794. However, since the enactment of the law, the MVUC rates were only adjusted once in 2004 and have not been adjusted for inflation for the past 19 years,”
“So, actually, it takes courage from Congress to undertake this, but it’s Congress, as representatives of the people, who would be in a better position to decide these things,” Salceda said.
Salceda’s proposal will raise some 274.45 billion over the next five years. The approved proposal also earmarks 45 percent of incremental revenues to the PUV modernization program, and 5 percent for road crash prevention programs.
For-hire vehicles will get a 50 percent discount from their MVUC payments, while motorcycles and tricycles, will be exempt.
“As envisioned, the earmarking for PUV modernization will be enough for equity subsidy of P500,000 per unit of PUV,” Salceda added.
According to estimates from the Department of Finance, “the implementation of the MVUC reform will have minimal impact on public transport fares in 2024” of between seven to 42 cents.
The DOF adds that the “proposal would also result to minimal impact on inflation at 0.068 percentage points in 2024.”
Even with the approved proposal, the resulting tax burden on the average sedan (0.21 percent of net retail price) will still remain below the ASEAN average of 0.49% of net retail price.
Salceda also adds that the proposal is highly progressive as “The proposed MVUC reform is progressive given that around 52 percent of car-owning households belong to the richest percentile.”
“It fits all the tests this committee employs. The rich will pay. It will create more funds for development. It will increase output. And the stakeholders, by and large, agree.”