Road tax can fund PUV modernization program

These modern jeepneys have been plying Iloilo’s streets since last year.

A bill that aims to optimize the value of the road users’ tax revenue and use some P25 billion of it to fund the Public Utility Vehicle (PUV) modernization program, help reduce pollution, and improve fuel efficiency and road safety is now pending in Congress.

House Bill 4695 (Motor Vehicle Road User’s Tax Act) proposes to amend Republic Act 11239 and seeks a 300-percent increase in the road user’s tax, officially called motor vehicle user’s charge.

The MVUC is collected by the Land Transportation Office (LTO) from the annual registration of all motor vehicles nationwide and earmarked for infrastructure development, according to principal author Albay Rep. Joey Salceda.

Last March, President Rodrigo Duterte signed RA 11239 that abolished the road users tax because of corruption allegations. All funds were diverted to the National Treasury.

There are more than 11 million motor vehicles registered in the Philippines, according to Salceda, chair of the House ways and means committee.

He said the proposed 300% hike in the motor vehicle road user’s tax (MVRUT) on all types of vehicles amounts to a just reasonable and optimal increase considering that the MVUC has not been adjusted since 2004.

RA 8794, which imposes user’s charge on all types of motor vehicles, also grants the President the authority to adjust the MVUC rates annually, a prerogative that was never exercised since the law’s enactment in 2004.

As a result, the MVUC proceeds supposed to finance infrastructure projects were not maximized, Salceda noted.

To cushion the impact of the hike, Salceda said it would be implemented in phases—2020 to 2022.

RA 8794 will also be retained during the period of implementation, but by 1 ‪January 2023‬, a unitary rate at P1.40 per kilogram of gross vehicle weight for all types will be in place.

Under the bill, Salceda explained, incremental revenues from the MVRUT increase will help finance PUV modernization and the universal health care.

Each jeepney owner would get a P500,000 subsidy for every unit he owns. Congress had earlier agreed to give the PUV owners at least P80,000 per unit.

As conceptualized, at least P25 billion will be set aside from MVUC collections annually for the PUV subsidy program to help the operators acquire new units.

The PUV modernization program, rolled out by President Duterte in 2017, provides a transition period ‪ending on 30 June 2020‬,by which time the government targets to remove from the roads all polluting and dilapidated jeepneys.

About 80 percent of the over 170,000 jeepney units aged 15 years and older will be phased out by June 2022.

“The challenge of the times for the Philippines, as a nation trapped in the middle income status, is to accelerate infrastructure investments and to translate economic growth into equitable gains for all,” Salceda said.