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Legislator expects Congress to pass motor vehicle tax bill by mid-2025

By Beatriz Marie D. Cruz, Reporter

A MEASURE raising the motor vehicle user’s tax is expected to pass before the end of the 19th Congress, the chairman of the House Ways and Means Committee said.

“I think we could pass one more tax-raising measure before the 19th Congress ends,” Albay Rep. Jose Ma. Clemente S. Salceda, who also heads the panel, said via Viber.

“The easiest one would be the updating of MVRUT (motor vehicle road user’s tax) rates, since the House version is already agreed upon by a consensus of transport sector stakeholders. We hammered out compromises for all sectors there,” he said.

That puts the onus on the Senate to approve the measure before the 19th Congress ends on June 6, 2025.

The bill seeks to increase the minimum charge on motor vehicle user’s tax based on vehicle weight. It is the third-largest source of tax revenue for the government, after the collections of the Bureau of Internal Revenue and the Bureau of Customs.

House legislators approved the measure in December, while the Senate has yet to file a counterpart bill.

While the MVUC ( motor vehicle user’s charge) is not part of the Legislative Executive Advisory Council’s priority bills, it is one of the “essential taxes” cited in President Ferdinand R. Marcos, Jr.’s State of the Nation Address last year.

“In addition, we have discussed certain administrative reforms such as more stringent rules on de minimis imports and closing down loopholes in the collection of percentage taxes,” Mr. Salceda also said.

Once Congress resumes session, Mr. Salceda said he will conduct hearings to ask all revenue generating agencies what they need to collect more taxes. Lawmakers are on break until July 21.

The motor vehicle user’s charge is one of the tax bills the Department of Finance (DoF) is counting on to narrow the National Government’s deficit.

The other bills include Package 4 of the Comprehensive Tax Reform Program (CTRP), the excise tax on pickup trucks, the value-added tax (VAT) on digital service providers, the excise tax on single-use plastics, and the mining fiscal regime. These are expected to generate P42 billion in annual revenue, the DoF said last week.

Economic managers last week raised the deficit ceiling for 2025 to P1.537 trillion from P1.490 trillion, but kept this year’s ceiling at P1.48 trillion. The government’s revenue targets were also raised for next year until 2028.

P&A Grant Thornton tax principal Eleanor L. Roque said that while pending the tax bills may not be sufficient to narrow the government’s budget gap, any new sources of revenue would help.

“Based on the press releases of the DoF, expected revenue impact from the proposed bills will probably not be substantial enough to offset the deficit. However, these additional taxes can definitely help,” she said in a Viber message.

The proposed digital services VAT, which is awaiting the President’s signature, is expected by the DoF to generate an average of P83.8 billion a year through 2028.

Package 4 of the CTRP as well as efforts to deter tax evasion would also help ensure tax compliance and increase revenue, Ms. Roque added.

“(Package 4) is expected to be revenue neutral since it is aimed to simplify taxation by providing uniform taxation for passive income. I hope that with the simplification, taxpayers will be able to pay the correct taxes.”

Meanwhile, the resumption of reclamation projects could also help generate revenue for the government, Mr. Salceda added.

The projects include the joint venture between Waterfront Manila Premier Development, Inc. and the City of Manila, as well as the Frabelle Fishing Corp.’s reclamation in Bacoor, Cavite.

“Those two projects alone could generate P154 billion for the government in net saleable land, not to mention billions more in fees. As I insisted to the DENR (Department of Environment and Natural Resources), there is really no practical or even legal reason for their delaying the resumption of reclamation,” he added.

However, both projects have been met with strong opposition from environmental advocates.