One day after the rationalization of the Motor Vehicle User’s Charge (MVUC) was mentioned in passing during President Ferdinand Marcos Jr.’s second State of the Nation Address (SONA), the House Committee on Ways and Means approved a bill proposing the increase of these charges.
House Bill No. 376, principally authored by Representative Joey Salceda, seeks to amend the MVUC law (Republic Act No. 8794) enacted more than two decades ago, and impose upon vehicle owners a Motor Vehicle Road User’s Tax (MVRUT) in its place. The measure exempts motorcycles and tricycles from paying the charge, and proposes discounted rates for vehicles for hire.
“As a backgrounder, the President has the authority to adjust the MVUC rates annually as stipulated in RA No. 8794,” said Salceda. “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.”
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HB 376 provides specific MVRUT rates from 2023 to 2025, followed by an annual increase of 5% from 2026 onwards. For example, passenger cars with a gross vehicle weight (GVW) of up to 1,600kg will be levied an MVRUT fee of P2,080 in 2023, P2,560 in 2024, and P3,040 in 2025, after which a 5% annual increase will be applied beginning 2026. Click here for the complete list of proposed MVRUT rates.
The measure proposes a 50% discount for vehicles for hire.
If enacted, HB 376 will raise around P274.45 billion over the next five years. Of this total, 45% will be earmarked for the PUV modernization program and 5% will be allocated 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.
The Department of Finance (DOF) projects minimal impact of P0.07 to P0.42 on public transport fares should the measure be enacted, adding that the “proposal would also result to minimal impact on inflation at 0.068 percentage points in 2024.”
Said Salceda: “The proposed MVUC reform is progressive given that around 52% of car-owning households belong to the richest percentile.
“It fits all the tests this committee employs. The rich will pay. It will create more funds for development. It will increase output. And the stakeholders, by and large, agree.”
