The House Committee on Ways and Means on Tuesday approved the proposed Motor Vehicle Road Users’ Tax to raise more funds for public transport modernization.
The unnumbered bill, approved by the committee chaired by Albay Rep. Joey Sarte Salceda, said the proposal seeks to reduce rates for vehicles for hire and exempt motorcycles and tricycles from fees.
“We expect P9.4 billion in the first year, P31.54 billion in the second year, and P52.28 billion in the third year,” he said.
According to Salceda, the motor vehicle users’ charge (MVUC) is just around P18 billion a year.
For-hire vehicles will get a 50-percent discount from their MVUC payments, while motorcycles and tricycles will be exempt, according to the bill.
Citing the Department of Finance, Salceda said the implementation of the MVUC reform will have minimal impact on public transport fares at 0.04 centavos.
Since the enactment of the law, Salceda said the motor vehicle user’s charge rates were only adjusted once in 2004 and have not been adjusted for inflation for the past 19 years.
The proposal was identified as a priority measure during the 2nd State of the Nation Address.
It seeks to amend Republic Act 8794, or the Motor Vehicle User’s Charge, enacted more than two decades ago, and impose a Motor Vehicle Road User’s Tax, or MVRUT instead.
The approved proposal also earmarks 45 percent of incremental revenues for the PUV modernization program and 5 percent for road crash prevention programs.
Salceda added that the proposal is “highly progressive,” as the proposed MVUC reform is “progressive” given that around 52 percent of car-owning households belong to the richest percentile.
He said the national government spends around P300 billion on road construction and repair every year.
Meanwhile, the schedule outlines a structured taxation plan that is set to be levied, assessed, and collected from registered vehicles, aiming to contribute to the maintenance and development of road networks across the country.
The proposed schedule categorizes vehicles based on their type and gross vehicle weight (GVW), providing a nuanced approach to taxation.
The tax schedule for passenger cars is delineated based on their GVW. The proposed rates for the years 2023–2026 onward are as follows: up to 1,600 kilograms (kg) GVW—P2,080 in 2023; P2,560 in 2024; P3,040 in 2025; and 2026 onwards, 5 percent increase.
For more than 1,600 kg up to 2,300 kg GVW—P4,680 in 2023; P5,760 in 2024; P6,840 in 2025; and 2026 onwards, 5 percent increase.
For utility vehicles, the tax is determined by the GVW, and the rates for the years 2023–2026 onwards are structured as follows: up to 4,500 KG GVW—P10,400 in 2023; P12,800 in 2024; P15,200 in 2025; and 2026 onwards, 5 percent increase.
The bill introduces a weight-based taxation approach for utility vehicles with a GVW up to 4,500 kg. The rates are set per kilogram of GVW: P1.40 per kg of GVW in 2023; P2.50 per kg of GVW in 2024; P3.40 per kg of GVW in 2025; 2026 onwards: 5 percent increase.
Meanwhile, the committee also approved the proposed Magna Carta for Taxpayers. The bill provides for the bill of rights and obligations of taxpayers.
Under the bill, the Taxpayer’s Basic Rights include: right to be informed; right to fair, uniform, and faithful Application of laws; right to challenge the position of and be heard by revenue authorities; right to fair and impartial proceedings before the revenue authorities; right to present evidence and witnesses; right to be assisted or represented by a qualified professional of their choice; and the right to timely and expeditious completion and finality of tax audits.
It also includes the right against baseless assessment; right to be given an opportunity for amicable settlement; right to avail of installment payment; right to pay no more than the correct amount of tax; right to relief from paying interests, surcharges, and penalties; right to recover actual costs and actual damages arising from judicial actions; right to quality service and assistance; right to privacy; and right to confidentiality.
Also, the bill provides the taxpayer’s basic obligations, which include: obligation to comply with tax laws; obligation to truthfully and timely disclose information; obligation to lodge and submit required documents completely and on time; obligation to keep and make tax records available for examination; obligation to cooperate with revenue authorities in tax audit; and obligation to timely pay taxes.
The bill also provides penalties for violations of the Bill of Rights of Taxpayers.
Image credits: Nonoy Lacza