The Department of Finance (DOF) said it is strongly opposing the proposed exemption of green vehicles from paying the motor vehicle user’s charge (MVUC), as indicated under House Bill (HB) No. 3616.
The DOF, in a letter signed by Carlos Dominguez, DOF secretary, dated September 24, submitted its comments on the various HBs pertaining to the MVUC. The letter was addressed to Albay Rep. Joey Salceda.
“Green vehicles carry the same externality on roads, therefore users should pay the same charge for road maintenance and repair,” Dominguez said in his letter.
“We would like to emphasize as well that green vehicles are already given preferential excise tax rate under Republic Act (RA) 10963 or the TRAIN (Tax Reform Acceleration and Inclusion) Law. We believe that the lower excise tax under TRAIN Law is a more appropriate manner to incentivize green vehicles than the proposed exemption from MVUC,” he added.
The DOF said “green vehicles” are considered to be environment friendly and have less of a damaging impact on the environment than conventional cars; use clean energy sources to fuel the engine, such as but not limited to, electricity, hybrid, solar, wind, hydrogen fuel cell, compressed natural gas or liquefied petroleum gas, other than the conventional sources of energy like petroleum and gasoline
HB 3616, introduced by Quezon City Rep. Alfred Vargas, seeks to amend Section 2 of RA 8794 or the MVUC Act of 2000, which imposes an MVUC to owners of all types of motor vehicles, by exempting green vehicles from payment of MVUC.
HB 3006 meanwhile, which is another proposal which seeks to amend the MVUC Act of 2000, is introduced by Camarines Sur Rep. Luis Raymund Villafuerte. Specifically, it aims to amend Sections 2 and 3 by increasing and imposing a single rate for all types of motor vehicles.
The DOF said it fully supports the proposal espoused under HB 3006 as it embodies the DOF proposal on MVUC rate increase.
Specifically, the DOF proposes a phased-in period of three years to increase MVUC rates. Rates per kilogram of gross vehicle weight in year one is P1.40, year two is P1.95 and year three is P2.50.
The DOF also proposes a unitary rate which will be applicable to all vehicles, private or government and for hire vehicles.
“The imposition of MVUC is a form of regulatory policy and the principle of which is to take into account the damage inflicted on the road by motor vehicles. The proposed unitary rate carries this principle since the heavier the vehicle, the higher the MVUC imposed. The phased-in period of three years would provide ease of transition for vehicle owners in conforming to the newly introduced rates,” Dominguez said in his letter.
He added the proposal will also provide sufficient sources of fund for the infrastructure programs of the government.
“It is estimated that the proposed MVUC structure will yield an annual incremental revenue of P11.6 billion during the first year of implementation, P24.9 billion on the second year, and around P39.9 billion on the succeeding years,” the finance chief said, as per DOF estimates.