House eyes tax hike on vehicle owners

By Julie M. Aurelio

June 29, 2023 12:00:00

The House of Representatives' tax panel will consider proposed increases in the motor vehicle user's charge (MVUC) before moving forward and increasing excise taxes on junk food and sweetened drinks.

"We will discuss taxes that hit the rich first. That's our constitutional duty," said Albay Rep. Jose Ma. Salceda, chair of the House committee on ways and means. The lawmaker said he still has questions on the proposed taxes on food being pushed by the Department of Finance (DOF) and Department of Health, and he wants to consider other options.

"The proposal to allow industrial users to directly import sugar in exchange for higher sugary drink taxes makes some sense from a gross value-added perspective," Salceda said.

"The DOF and the committee will sit down on the modalities and the balancing act first. There's a sweet spot here," he added. Salceda said there were five bills filed to amend Republic Act No. 8794, passed 23 years ago, to impose a motor vehicle user's charge on owners.

Apart from updating the rates in RA 8794, the five measures also push for the exemption of motorcycles, with or without sidecars, from the motor vehicle user's charge.

"Only 5.9 percent of Filipino households own any type of car, jeep or van. Meanwhile, half of Filipino households own some sort of motorcycle," Salceda pointed out.

He did not clarify, however, whether the panel was considering doing away with the junk food tax, which is set to be implemented in 2025 under RA 10963, which was rushed through Congress in 2017.

The DOF's latest proposal was to increase the rates in RA 10963 and move forward its implementation from 2025 to 2024.So the motor vehicle user's charge proposal is actually a second tax increase proposal, although affecting fewer taxpayers and is expected to be less inflationary.

Salceda is also proposing sweeteners to the new tax measure.

Motorcycles exempt

"My proposal is to exempt motorcycles from MVUC, especially since it's a means of living now, with delivery express services and the like. Tricycles will also be exempt under my proposal," Salceda said.

The economist turned lawmaker said the proposed updates to RA 8794 "[are] highly progressive, and his proposal will benefit more Filipinos."

Under RA 8794, the base rates of the motor vehicle user's charge range from P120 to P4,000, depending on the motor vehicle's gross weight.

Under the five pending measures, the new rate will range from P2,080 to P10,400 for passenger cars, depending on the gross vehicle weight.

As to utility vehicles, sports utility vehicles, buses, trucks and trailers with a gross vehicle weight of 4,500 kilograms or more will be levied a motor vehicle user's charge of P1.40 or more per kg of gross vehicle weight. The bills also propose a fixed yearly increase until 2025, and a yearly increase of 5 percent from 2026 onward.

In addition, the measures also push for the earmarking of 45 percent of the incremental revenues from the said levy for the public utility vehicle modernization program.

"We are also thinking of earmarking some revenues for zero-interest loans for local jeepney manufacturers," Salceda said. INQ