Solon Files Bill That Increases Motor Vehicle Tax to 33%

Don't look now, but you might have to spend more money when paying for your Motor Vehicle User's Tax in the coming years.

House Bill No. 4695 or the Motor Vehicles Road User's Tax Act seeks to impose a 33-percent increase on motor vehicle user's charge (MVUC).

The new bill was filed by chairman of the House Committee on Ways and Means, Representative Jose Clemente "Joey" Salceda. Aside from the 33-percent increase in MVUC, it also wants to apply the increase in the next three consecutive years.

House Bill No. 4695, or Motor Vehicles Road User's Tax Act

The bill proposes that road user tax on cars with gross vehicle weights of up to 1,600 kilograms (kg) will increase from PHP800 to PHP2,912 next year. It will then increase to PHP3,028 in 2021 and PHP3,056 in 2022.

Vehicles with 1,600 kg to 2,300 kg gross vehicle weights will increase from the present PHP1,800 to the proposed PHP6,552 in 2020, PHP6,814 in 2021, and PHP6,876 in 2022. Those that exceed more than 2,300 kg in gross weight will change from PHP4,000 to PHP14,560 (first year), PHP15,142 (second year) and PHP15,280 (third year).

Meanwhile, the MVUC for utility vehicles of up to 2,700 kg gross vehicle weight will increase from the present PHP1,000 to the proposed PHP3,640, PHP3,785 and PHP3,820 in the next three years. Those that exceed 2,700 kg will get additional charges for every 100 kgs in excess.

Exemptions to the law

The solon also added that those who are "not rich and cannot afford cars" are absolved from the law. Moreover, motorcyle owners "who use less road space than other vehicles" are also not included in the bill. However, owners of big motorcycles or "big bikes" that have engine displacements of 400cc and above are not exempted from the law.

Extending MVUC's reach

The MVUC has been controversial due to numerous graft and corruption charges against its officials. Presently, the tax it generates is solely used to repair and construct roads, bridges, and drainages around the country. However, Salceda's new house bill on MVUC will "improve the progressivity" of the motor vehicle’s users’ charge. Specifically, the additional taxes generated will serve as additional funds for "critical health" programs and other significant government projects, such as the Universal Health Care law and the Public Utility Vehicle Modernization Program (PUVMP).