Motor Vehicle User’s Tax/Charge

The measure proposes to replace the existing motor vehicle user’s charge rates, which had not been updated since 2004, with the motor vehicle user’s tax. The motor vehicle’s user’s tax will be imposed on all public and private vehicles, except for motorcycles, which, under the current system, are obligated to pay a motor vehicle user’s charge. The measure in the previous Congress reached the third and final reading at the House level.

The final version of the House measure, now HB 9647, was approved in the third reading on December 12, 2023. This version proposes not only to exempt motorcycle riders from the payment of the motor vehicle user’s tax, but also adjusts the current rates for other public and private vehicles. According to the introductory note of the bill:

Meanwhile, the Senate version of the measure, SB 2375, is still in deliberation at the committee level. It is a much simpler bill in which it proposes to exempt motorcycles from the payment of the motor vehicle user’s tax. The rates for other public and private vehicles are not changed.

President Ferdinand Marcos Jr. identified this measure as an administration priority during the 2023 State of the Nation Address. Congress and key government agencies like the Department of Finance (DOF) in general also appear supportive of the measure. But newly-appointed Secretary Ralph Recto stated that the legislative proposals will have to be “tweaked,” explaining: “

“Today, 50 percent or thereabouts, of vehicles are unregistered. And if you impose higher taxes, maybe more vehicles will not register…So I think we have to temper some of these increases because like I said, they’re also inflationary. And it’s all about timing as well.”

Recently, House Committee Chair on Ways and Means Representative Joey Salceda expressed in an interview the possibility of this measure passing next year.

Meanwhile, some transportation stakeholders have sounded concerns over the measure, with the Pagkakaisa ng mga Samahan ng Tsuper at Operator Nationwide (PISTON) President Mody Floranda stating that the increase in the rates for the motor vehicle user’s tax could potentially add financial burden to jeepney operators and drivers who are earning meager incomes. House Representative Arlene Brosas, who voted ‘no’ to approve the House bill in the third reading deliberations, noted that the measure proposes to 45 percent of the funds collected from the motor vehicle user’s tax to fund the Public Utility Vehicle Modernization Program (PUVMP), a program aims to replace old private utility vehicles (PUVs) with a more eco-friendly and fuel-efficient mode of transportation but has been criticized for being anti-poor.

Opposition from a few select stakeholders could lengthen deliberations for the measure, since they are expected to lobby some changes in the bill, but it is not expected to affect the likelihood of the measure’s passage into law, which PSA believes is likely.