THE House of Representatives on Tuesday approved on second reading the proposed Motor Vehicle Road Users’ Tax (MVRUT), a move aimed at generating additional funds of P68.19 billion over five years to support the modernization of public transport.
Through viva voce voting, lawmakers approved House Bill 9647, which seeks to amend Republic Act 8794, or the Motor Vehicle User’s Charge, enacted more than two decades ago, and impose an MVRUT instead.
The bill is expected to be approved on third and final reading next week.
According to House Committee on Ways and Means Chairman Joey Sarte Salceda, the Motor Vehicle Road User’s Tax is the country’s most important fiscal instrument against traffic congestion and the overuse of the country’s road facilities.
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 lack of adjustments since 2004 has contributed to a 26.62 percent year-on-year increase in car sales and daily traffic volumes in the NCR,” he said.
In 2022, total MVUC collections, which accrued to the Special Road Fund of the Department of Public Works and Highways, amounted to P19.8 billion.
In that year, Salceda said the country allocated P485 billion for roads in the 2022 national budget.
“Clearly, vehicle owners are receiving a net subsidy for their ownership of cars. In fact, MVUC rates have not been adjusted since 2004,” he added.
“[With the approval of the bill], 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.
Salceda said the proposal seeks to reduce rates for vehicles-for-hire and exempt motorcycles and tricycles from the charge.
For-hire vehicles will get a 50-percent discount from their MVUC payments, while motorcycles and tricycles will be exempt, per the bill.
Citing the Department of Finance, Salceda said the implementation of the MVUC reform will have a minimal impact on public transport fares at 0.04 centavos.
The proposal was identified as a priority measure during the 2nd State of the Nation Address.
The approved proposal also earmarks 45 percent of incremental revenues for the PUV modernization program and 5 percent for road crash prevention programs.
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 follow: up to 1,600 kilograms (kg) GVW—P2,080 in 2023; P2,560 in 2024; P3,040 in 2025; and 2026 onwards, a 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, a 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, a 5 percent increase.
The bill introduces a weight-based taxation approach for utility vehicles with a GVW of 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.