THE House committee on ways and means has approved House Bill No. 376 proposing to upgrade the Motor Vehicle Road User’s Charge (MVUC), one of the legislative priorities mentioned by President Marcos Jr. in his second State of the Nation Address (SONA) on Monday.
The bill is also part of the priorities of the Development Budget Coordination Committee (DBCC).
HB 376 seeks the imposition of a Motor Vehicle Road User’s Tax (MVRUT) in lieu of the MVUC, which was established under Republic Act No. 8794 that was enacted more than two decades ago.
The bill proposes higher MVUC rates while giving a 50 percent discount to for-hire vehicles and exempting motorcycles and tricycles.
Albay Rep. Joey Salceda, the bill’s principal author and chairperson of the House committee on ways and means, said the measure will raise some P274.45 billion over the next five years, of which 45 percent of incremental revenues will go to the PUV modernization program, and five percent 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.
“As a backgrounder, the President has the authority to adjust the MVUC rates annually as stipulated in RA No. 8794. However, since the enactment of the law, the MVUC rates were only adjusted once in 2004 and have not been adjusted for inflation for the past 19 years. So, actually, it takes courage from Congress to undertake this, but it’s Congress, as representatives of the people, who would be in a better position to decide these things,” Salceda said.
Estimates from the Department of Finance show that the implementation of the MVUC reform will have minimal impact on public transport fares in 2024 of between seven to 42 centavos, and on inflation at 0.068 percentage points for the same year.
But even with the approved proposal, Salceda said the resulting tax burden on the average sedan (0.21 percent of net retail price) will remain below the ASEAN average of 0.49 percent of net retail price.
The veteran economist-lawmaker also said that “the proposed MVUC reform is progressive given that around 52 percent of car-owning households belong to the richest percentile.”
