House wants lower road tax hike

Jess Diaz - The Philippine Star
House wants lower road tax hike
“If we adopt the DOF bill, we will have 11 million more enemies,” Albay Rep. Joey Salceda, who is ways and means committee chairman, told reporters yesterday.

MANILA, Philippines — The House of Representatives is rejecting the Department of Finance (DOF) proposal for an increase of more than 300 percent in the road user’s tax, which the government collects from motor vehicle owners. 

 “If we adopt the DOF bill, we will have 11 million more enemies,” Albay Rep. Joey Salceda, who is ways and means committee chairman, told reporters yesterday.

He was referring to the number of Filipinos who own motorcycles, cars, pick-ups, and other motor vehicles who are paying the tax in the form of increased annual registration fees paid to the Land Transportation Office (LTO). The levy is officially called motor vehicle user’s charge (MVUC).

Salceda said his committee would endorse a lower increase of “90 percent of existing rates over three years, or 30 percent each year possibly beginning next year.”

 “We will work on our proposal after the third reading approval of the budget later this month. The plan is still to exempt the seven million motorcycle owners from the increase,” he said.

Other congressmen said big motorbikes should be covered by the adjustment, noting that such vehicles are even more expensive and have the same if not bigger engine displacement than entry-level cars.

The MVUC increase is among several tax measures leaders of the House and the Senate had agreed to pass in a meeting with administration officials led by Executive Secretary Salvador Medialdea and Finance Secretary Carlos Dominguez in Malacañang early last month.

Under the DOF-proposed law, the road user levy would be P1.40 for next year, P1.95 for 2021 and P2.50 for 2022, based on the vehicle’s gross weight, plus its cargo and/or passenger carrying capacity as determined by the LTO.

In the specific example of a 2014 Toyota Hilux utility vehicle, its owner paid P2,040 in road user tax last year, including the registration fee, plus P50 for stickers, P10 as contribution to the LTO “legal research fund” and P169.06 as computer fee, which was presumably paid to the agency’s automation service provider.

As reflected in its certificate of registration, the Hilux has a gross weight of 2,755 kilos or almost 2.8 tons, and a “net capacity” of 1,378 kilos or 1.4 tons. It is not clear if this is the cargo and/or passenger carrying capacity the DOF referred to in its proposed law.

Based alone on the Hilux’s gross weight of 2,755 kilos and using the DOF-proposed rates, the owner would pay a road tax of P3,875 next year, P5,372.25 in 2021 and P6,887.50 in 2022, excluding miscellaneous fees and the additional levy for the vehicle’s load-bearing capacity.

The DOF is suggesting that the rates be uniform for all vehicles, whether old or new.

The present rates are based on Executive Order 43, issued by the late president Corazon Aquino in 1986. It prescribed the annual registration fees motor vehicle owners paid.

The order classified vehicles as light, medium, heavy, and utility vehicles, for which there were varying amounts of annual registration fees depending on the type, engine displacement and age of the vehicle.

The registration fee for a new car classified as light (up to 1600cc) was P1,000 and P700 for the oldest (more than five years) light vehicle. 

The rates were adjusted when the MVUC law took effect in June 2000: 25 percent more every year until the fees doubled in 2004. The adjustments went to four MVUC funds administered by the defunct Road Board.

Use of MVUC collections was attended by numerous irregularities.

One case involved an obscure trading company in San Juan, Metro Manila. Though it dealt in pharmaceutical products, the firm bagged hundreds of millions in contracts for road repairs and supply of road signs.

In November 2009, the late senator Miriam Defensor Santiago called on the Senate to file plunder charges against Road Board officials for allegedly misusing P60.5 billion in MVUC collections, calling the misuse “apocalyptic corruption.” 

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