June 27th, 2023
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) says that the House tax panel will hear proposals to update motor vehicle user’s charges (MVUC) rates before it hears proposed taxes on salty and sugary food, when session resumes after President Marcos’s second State of the Nation Address.
Salceda said that there are “already four proposals pending the Committee for updating MVUC rates. We are considering a set of other options, including placing MVUC in the Tax Code, since the Road Board, which used to administer it, no longer exists anyway.” The first of the proposals, House Bill No. 376, was filed by Salceda.
“JICA estimates the cost of traffic in the Greater Manila Area to be 1.227 trillion alone, based on a 2017 study. That has likely grown,” Salceda said.
“Meanwhile, the National Government spends around P300 billion on road construction and repair every year. Meanwhile, the MVUC is just around P18 billion a year. So, car owners are heavily subsidized for car use,” Salceda explained.
“That’s not to mention distorted loopholes, like the pickup truck excise tax exemption.”
“The effect is, when something is artificially cheaper than it should be, more people do it than should be. So, we have more traffic than our roads can accommodate,” Salceda added.
Salceda adds that the MVUC is highly progressive, and his proposal will benefit more Filipinos.
“Only 5.9 percent of all Filipino households own any type of car, jeep, or van. Meanwhile, half of Filipino households own some sort of motorcycle.”
“My proposal is to exempt motorcycles from MVUC. Especially since it’s a means of living now, with delivery express services and the like. Tricycles will also be exempt under my proposal.”
“We are also thinking of earmarking some revenues for zero-interest loans for local jeepney manufacturers. The imported modern ones are too expensive. We need locally made cheaper ones, so that the jobs created are created here.”
Motor vehicle, luxury taxes to be discussed before food taxes
Salceda adds that the tax panel will discuss the motor vehicle tax and the proposed luxury goods tax, which President Marcos already gave his support for, before they discuss proposals for junk food taxes.
“We will discuss taxes that hit the rich first. That’s our constitutional duty. I still have questions about the proposed tax increase on sweetened beverages, and the proposal for salty food taxes. I also want to consider other options, including closing some of the tax exemptions to the sweetened beverage tax,” Salceda said.
Salceda also said that “the proposal to allow industrial users to directly import sugar in exchange for higher sugary drink taxes makes some sense form a gross-value added perspective. We of course want to keep the jobs they create. And, in the past, I have expressed my support for the same as a separate proposal without the tax side.”
“We just need to study the impacts of doing both at the same time, because remember, we have a domestic sugar sector. I am thinking of a similar system as RA 7171, where tobacco producing provinces now get more from their shares of excise tax than the tobacco they actually produce,” Salceda added.
“Anyway, the DOF and the committee will sit down on the modalities and the balancing acts first. There’s a sweet spot here,” Salceda said.