DOF favors uniform road user tax

MANILA, Philippines — The Department of Finance (DOF) favors a uniform road user tax instead of different rates for different types of motor vehicles as proposed by Albay Rep. Joey Salceda, who chairs the House of Representatives committee on ways and means.

In a letter to Salceda, Finance Secretary Carlos Dominguez expressed support for the bill filed by Deputy Speaker Luis Raymund Villafuerte of Camarines Sur.

The road user tax is officially called Motor Vehicle User’s Charge or MVUC, which is paid to the Land Transportation Office (LTO) in the form of increased annual registration fees for the more than 11 million vehicles in the country.

Dominguez informed Salceda that the DOF is supporting Villafuerte’s Bill 3006 “as it embodies the DOF proposal on MVUC rate increase.”

He said the proposed MVUC increase would “provide sufficient source of funds for the infrastructure programs of the government.”

Villafuerte and the DOF are both suggesting a uniform MVUC rate based on gross vehicle weight (GVW) of P1.40 in 2020, P1.95 in 2021 and P2.50 in 2022. The gross weight would include the vehicle’s load carrying capacity as certified by the LTO.

Under both proposals, the road user tax on a car with a GVW of up to 1,600 kilos would amount to P2,240 on the first year, P3,120 on the second and P4,000 on the third, excluding registration and miscellaneous fees.

On the other hand, in Bill 4695, Salceda proposed that the MVUC on the same car would go up from the present P800 under Republic Act 8794 to P2,912 next year, P3,028 in 2021 and P3,056 in 2022.

The tax on vehicles with a GVW of 1,600 kg to 2,300 kg will increase from P1,800 to P6,552 in 2020, P6,814 in 2021 and P6,876 in 2022; while the levy on those exceeding 2,300 kilograms in gross weight will jump from P4,000 to P14,560, P15,142 and P15,280 in the next three years.

For utility vehicles of up to 2,700 in GVW, Salceda’s proposed rates are P3,640, P3785 and P3,820 for 2020, 2021 and 2022, respectively. The present tax is only P1,000.

For those exceeding 2,700 kilograms, there would be an additional charge for every 100 kgs in excess of 2,700.

Motorcycles with engine displacement of up to 400 cc will be exempt from paying MVUC. At present, they are levied P120 if without a sidecar and P150 if with a sidecar.

Motorcycles exceeding 400 cc in engine displacement will be levied P437, P454 and P458 over the next three years if without a sidecar, and P546, P568 and P573 if there is an attached sidecar.

The proposed rates show that the planned increase would be more than 300 percent.

The DOF is proposing that the MVUC should apply to all types of vehicles, including so-called green cars, since these are using the same road network in Metro Manila and the provinces.

The rates proposed by the DOF and Villafuerte are higher than those Salceda suggested.