House plenary OKs bill hiking road users’ tax

MANILA, Philippines — The House of Representatives has approved on second reading a bill increasing the road users’ tax, aimed at raising more revenue to finance road infrastructure and public utility vehicle modernization programs.

In plenary session Wednesday night, House members decided via voice voting to pass on second reading House Bill 6136, which imposes a 90 percent increase in Motor Vehicle Road Users’ Tax (MVRUT) on a staggered basis over three years.

MVRUT is the tax collected through the annual registration fee that owners of more than 11 million vehicles pay to the Land Transportation Office (LTO). The last adjustment in this revenue measure was made in 2004.

Albay Rep. Joey Salceda, chairman of the ways and means committee and principal author of the bill, sponsored the measure on the floor and had it approved without any interpellation.

“The cross-party consensus of the House, including the progressive groups and the minority, to move the bill forward validates the exhaustive efforts we have done to ensure that this is the most progressive transport tax in recent history,” he stressed.

Under HB 6136, the 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 increase of P480 or 30 percent for the first year of implementation.

For the succeeding two years, the tax would increase to P2,560 and P3,040 for light vehicles, which comprise the most number of motor vehicles in the country.

On the other hand, the 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 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 MVUC 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.

Salceda argued that the latest tax measure would be beneficial to the government as it is expected to raise some P90 billion in five years of implementation.

He revealed that 50 percent of 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 revenues, on the other hand, will be used to boost funding for the Build, Build, Build programs.

Salceda also assured his colleagues that the measure is not anti-poor as “the rich will primarily pay for the tax.”

“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 explained.   

The House is expected to pass the measure on third and final reading next week before it goes on Lenten recess.