By Chino S. Leyco
Car owners should brace themselves for higher yearly registration fees as the Department of Finance (DOF) prepares an Executive Order (EO) seeking to raise the motor vehicle user’s charge (MVUC).
As the DOF awaits the legislated reforms to the Land Transportation Office’s MVUC law, Finance Undersecretary Karl Kendrick T. Chua said they plan to tap President Rodrigo R. Duterte’s power to impose higher registration fees on car owners.
Citing Republic Act (RA) No. 8794 of 2000, or the MVUC law, Chua said that “after the fourth year from the effectivity of this Act, the President of the Philippines may adjust the rates contained in Section 3 which shall be reflected but shall not exceed the annual rates of the Consumer Price Index (CPI).”
“The President may adjust such rates not more than once every five (5) years,” the law further stated.
Chua said the past administrations did not increase the MVUC rates since 2004, thus President Duterte is allowed to adjust the original charges under RA 8794.
For this reason, the finance official disclosed the DOF is now drafting an executive order for President Duterte to increase the base rates for private and government cars as well as public utility vehicles (PUVs).
“We will submit the draft EO maybe soon,” Chua said in an interview, and if approved by the chief executive, the Presidential Order will take effect next year.
But Chua said the increase in MVUC will not be substantial as the rate is pegged at the average inflation for this year, which stands at only 4.5 percent in the first seven months.
Under the current law on charges to the owners of motor vehicles, the base rates vary according to type and weight of passenger cars, utility vehicles, motorcycles, buses, trucks and trailers.
Chua, meanwhile, said that the EO is just an initial step under the government’s proposed series of increases in MVUC rates, which is part of the Durterte administration’s comprehensive tax reform program (CTRP).
The finance official said the DOF is still pushing for the overhaul of RA 8794 that once approved by Congress, will significantly raise the base MVUC rates and its mandated annual increase.
“We propose an increase in the MVUC rates based on the cumulative inflation since 2014 and an overhaul of its base rates,” Chua said.
Finance Assistant Secretary Maria Teresa S. Habitan said in a separate interview that the Aquino administration attempted to raise the MVUC through an executive order, but due to different interpretations of the law, the plan did not push through.
“The DOF then interpreted the law that the President is allowed to impose the cumulative five-year inflation, but the Office of the President said the increase should be based on the annual inflation in the preceding year,” Habitan said.
“I don’t know what happened after that two different interpretations,” she added.
Chua, however, said the DOF has yet to come out with its computation on the potential government revenues once the proposed EO is signed and implemented next year.