Home Economy The price of road use

The price of road use


Over the years it has been called many things: motor vehicle registration fee, motor vehicle user’s charge, and by 2024, motor vehicle road user’s tax. But essentially, these are all the same thing. It is a fee that vehicles owners pay to the government for the right to own, and presumably use, a motor vehicle on Philippine roads. It is the price to pay for the privilege of using roads.

And by this year, with the blessing of the House and the Senate, such fees will go up by 5% every year for all motor vehicles from 2026 onwards. For 2024 and 2025, there will be fixed rate hikes. But public utility and for-hire vehicles will get a 50% discount, while motorcycles and tricycles will be exempt. Obviously, the heavier the vehicle, the higher the fee.

I do not agree with the plan as approved by the House. And I hope the Senate can still make changes to the bill. It is as if the government wants private vehicle owners to swap their cars for motorcycles. Or to take public transportation, even when such is still severely lacking. In my opinion, if it is a road user’s tax, then all road users must pay. No discounts, no exemptions.

Taxes or fees or charges are paid for several reasons, which include: for the government to raise revenues; to collect money from road users for road improvement and road safety projects; to pay for the “negative externalities” of motor vehicle use such as emission and carbon footprint; in this case, to fund public transport modernization; and, even to dissuade excessive vehicle ownership through a “luxury” tax, etc.

Last month, the House of Representatives approved the proposed Motor Vehicle Road Users’ Tax (MVRUT) law to replace the annual registration fee called the Motor Vehicles Users Charge or MVUC. The fees collected will partly go to projects to modernize public transportation and to road crash prevention programs. Previously, MVUC collections partly went to the Special Road Fund of the Public Works department.

Obviously, the government desperately needs money and that raising the fees now primarily aims to fund the 2024 budget, which is the largest ever national budget in Philippine history. But if the intention is also to raise money to fund public transport modernization projects, then why discount fees paid by public utility and for-hire vehicles? The fund aims to benefit them.

And why exempt motorcycles and tricycles? As a revenue-generating measure, each centavo raised from the proposed law will matter. If I am not mistaken, there are now more motorcycles than cars on our roads. So, motorcycles’ revenue potential is high. Then, why exempt them from the fee or tax? All road users must pay, maybe including motorized scooters, motorized personal mobility devices, and perhaps even electric motor vehicles.

The House Committee on Ways and Means intends for the proposed MVRUT to be “a critical fiscal tool against traffic congestion and the overuse of the country’s road infrastructure.” Again, if this is the case, even motorcycles and tricycles occupy road space and contribute to congestion and “overuse” of roads? So why exempt them? And why give discounts to PUVs and for-hire vehicles such as school buses, tourist buses, transport network vehicles like Grab cars, and for-hire fleet vehicles, etc.?

The present MVUC is based on vehicle weight, with vehicles owners paying up to P4,000 depending on the type and weight of their units. Under the proposed law, this can go up to as high as P11,000 by 2025, with a guaranteed increase of 5% annually starting 2026. The heavier the vehicle, the higher the fee.

This I can understand as road damage and maintenance cost is impacted mostly by vehicle weight — the heavier the vehicle the bigger the road impact and damage. But even motorcycles and tricycles weigh something, and contribute to road damage. And yet, unlike the present MVUC, two-wheelers and three-wheelers will be exempt from the higher “registration” fees? Also, does this mean that motorcycles and tricycles will no longer be “registered”? Or that they will still be paying the old fees?

Moreover, the negative externalities or negative impact of vehicle use go beyond road space and damage; and time wasted in traffic jams. There is also vehicle pollution and possible accidents involving people other than the vehicle owner. So, more than just vehicle weight, perhaps emission and carbon footprint should also be taken into consideration.

In the last 20 years, we have been taxing vehicles based on their price, and computing registration fees based on their weight. There was a time when vehicles were taxed based on engine size and passenger capacity. If vehicles will continue to be taxed based mainly on price or value, then maybe registration fees should also consider engine size and not just weight. Thus, an emission charge may be necessary. But there should not be any exemptions, even for motorcycles and tricycles.

I believe the proposed MVRUT law requires more study. And if exemptions or discounts are to be given, then this should be for vehicles for seniors and persons with disabilities (PWD), or those who are particularly disadvantaged by the public transport system. To some degree, the proposed law appears anti-safety and anti-PWD by favoring motorcycles with exemptions and PUVs with discounts. Neither vehicle types are helpful or convenient to seniors and PWDs.

Moreover, while I lack data to support this, road observation leaves one with the impression that motorcycles are less safe than cars particularly for seniors, PWDs, and children. And yet, to an extent, the proposed law indirectly pushes the market towards this type of vehicle for owners to save on annual recurring costs. Even while safety enforcement is seemingly deficient.

After 20 years, perhaps it is time to raise registration fees. And maybe fees should be indexed to inflation. However, other than vehicle weight, pollution and emission should also be taken into consideration. In addition, motorcycles and tricycles should not be exempted from new fees. And all road users must pay, in full, even PUVs and for-hire vehicles.

Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippine Press Council


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