Finance thumbs down MVUC exemption for ‘green’ vehicles

The Department of Finance (DOF) has expressed its opposition against a proposal to exempt green vehicles from paying the motor vehicle user’s charge (MVUC), saying these kind of vehicles are already enjoying incentives in the form of lower excise taxes.

In a letter addressed to House ways and means committee chairman Joey Salceda, Finance Secretary Carlos Dominguez said the agency is against the provisions of House Bill 3616 currently pending in the Congress.

“The DOF strongly objects the proposed exemption of green vehicles from payment of MVUC under HB 3616. Green vehicles carry the same externality on roads, therefore users should pay the same charge for road maintenance and repair,” Dominguez said.

The finance chief also pointed out that green vehicles already pay preferential tax rates under Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

Under the law, purely electric vehicles are exempt from the excise tax, while hybrid electric vehicles are subject to 50 percent of the applicable tax rate.

“We believe that the lower excise tax under TRAIN Law is a more appropriate manner to incentivize green vehicles that the proposed exemption from MVUC,” he said.

On the other hand, Dominguez said the DOF is fully supportive of House Bill 3006, which seeks to amend Sections 2 and 3 of Republic Act 8794 or the MVUC Act of 2000 by increasing and imposing a single motor vehicle charge for all types of motor vehicles.

“The DOF fully supports the proposal espoused under HB 3006 as it embodies the DOF proposal on MVUC rate increase,” the secretary said.

Specifically, he said the DOF is proposing for a staggered increase in MVUC rates, to P1.40 per kilogram of gross vehicle weight (GVW) in the first year, P1.95 in the second year, and finally, P2.5 billion in the third years.

Dominguez said the agency also pushing for unitary MVUC rates to be applicable to all vehicles, whether private or government, or for-hire vehicles.

“The imposition of MVUC is a form of regulatory policy and the principle of which is to take into account the damage inflicted on the road by motor vehicles. The proposed unitary rate carries this principle since the heavier the vehicle, the higher the MVUC imposed. The phased-in period of three years would provide ease of transition for vehicle owners in conforming to the newly introduced rates,” Dominguez said.