House panel approves additional taxes on motor vehicles

The House ways and means panel on Tuesday approved House Bill 376, creating the Motor Vehicle Road Users’ Tax (MVRUT), committee chairperson Joey Salceda said.

The tax is one of the essential revenue measures cited by President Ferdinand Marcos, Jr. during his second State of the Nation Address (SONA) on Monday.

House Bill 376 amends Republic Act No. 8794 or the Motor Vehicle Users’ Charge (MVUC), which was passed into law more than two decades ago.

Salceda said that the resulting tax burden on the average sedan provided by the bill will be at 0.21% of net retail price, still below the Southeast Asia average of 0.49% of net retail price.

"The proposed MVUC [Motor Vehicle Users’ Charge] reform is progressive given that around 52 percent of car-owning households belong to the richest percentile," he said.

"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," the Albay congressman added.

House Bill 376 also earmarks 45% of incremental revenues to the public utility vehicle (PUV) modernization program and 5% to road crash prevention programs.

“As envisioned, the earmarking for PUV modernization will be enough for equity subsidy of P500,000 per unit of PUV,” Salceda said.

For-hire vehicles, on the other hand, will get a 50% discount on their MVUC payments, while motorcycles and tricycles will be exempt from the measure.

“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 pointed out.

"This will raise more funds for public transport modernization, while reducing rates for vehicles for-hire and exempting motorcycles and tricycles from the charge," he added.

Salceda also said that while the President has the authority to adjust MVUC rates annually, this was only done once in 2004 and have not been adjusted since.

“It takes courage from Congress to undertake this, but Congress, as representatives of the people, is in a better position to decide these things,” Salceda said.

Salceda projects that the bill, of which he is the principal author, will raise around P274.45 billion in the next five years.

Based on the position paper submitted by the Finance department on the measure, the implementation of new MVUC taxes will have minimal impact on public transport fares in 2024 of between seven to 42 centavos.

In addition, the DOF said that the proposal would also result in minimal impact on inflation at 0.068 percentage points in 2024. — BM, GMA Integrated News