House OKs bill doubling road users’ tax

MANILA, Philippines — The House of Representatives has approved on third and final reading a bill seeking to increase by as much as 90 percent the cost of keeping a car.

Voting 239-5 with one abstention, the House plenary stamped its overwhelming approval on House Bill 6136, which nearly doubles the current Motor Vehicle Road Users’ Tax and will be carried out on a staggered basis starting this year (2020) until 2022. 

Congress is now on a Holy Week break and will resume sessions on May 4. 

More popularly known as the “road users’ tax,” MVRUT is the tax government collects through the annual registration fee that owners of more than 11 million vehicles pay to the Land Transportation Office. 

The last adjustment to such renewal of auto registrations was made in 2004. 

Under the proposal, tax on cars and similar light vehicles weighing up to 1,600 kilos would go up from the present P1,600 to P2,080, or an additional P480 - roughly 30 percent for the first year of its implementation. 

For the next two years, however, the cost of registering a motorist’s vehicle would be upped to P2,560 and P3,040 for light vehicles, which comprise the bulk of motor vehicles all over the country. 

On the other hand, rates for all other vehicles like utility vehicles, SUVs, buses, trucks and trailers will be based on a uniform per kilogram of gross vehicle weight (GVW): P1.40/kg of GVW for first year, P2.50/kg of GVW for second year, P3.40/kg of GVW for third year.

For vehicles weighing over 1,600 kilos but below 2,300 kilos, the road users’ tax will increase to P4,680 for this year (2020), P5,760 for 2021 and P6,840 for 2022.

Lastly, the MVRUT for vehicles weighing above 2,300 kilos will increase to P10,400 for the first year, P12,800 for the second year and P15,200 for the third year.

On the fourth year of implementation of the law, there would be a uniform rate of P1.42 per kilogram based on the vehicle’s gross weight, with subsequent annual increment of five percent. This means a light vehicle would be levied P2,272 in road user tax in 2023.

To ensure that inflation does not erode the value of revenues, an annual increase of five percent will be imposed by Jan. 1, 2023 through revenue regulations to be issued by the Department of Finance.

The measure was sponsored by Albay Rep. Joey Salceda, chairman of the House committee on ways and means, who maintained that the bill will benefit the government because it is projected to raise about P90 billion in funds in the first five years of its implementation. 

 About half of its incremental revenues will finance modernization of public utility vehicles as well as other government programs for the prevention of death due to road accidents and for victims’ assistance.

The other 50 percent of the revenues will be poured on the massive infrastructure projects of the Duterte administration, dubbed as the Build Build build program, where roads, bridges, trains and the like will be built.

Salceda insisted the measure is not anti-poor primarily because the rich will pay for the tax.

 “About 55.6 percent of all cars are owned by the top 10 percent of the population, while only 1.7 percent are owned by the bottom 30 percent. This makes this tax extremely progressive. Let’s make the primary road users pay for road use,” he said.