The Philippine Star

Pass-through fees

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If the administra­tion wants to tackle inflation and improve ease of doing business, it should scrutinize one of the contributo­rs to high prices particular­ly of agricultur­al commoditie­s, and a long-standing complaint of businessme­n: pass-through fees collected from delivery trucks.

On Sept. 25 last year, amid high inflation, President Marcos issued Executive Order No. 41, prohibitin­g local government units from collecting pass-through fees from delivery vehicles using national roads. Because of devolution, however, the Department of the Interior and Local Government could only “strongly urge” LGUs to stop collecting the fees. EO 41 is coming into effect following its recent publicatio­n. Malacañang and the DILG should see how many LGUs have gone along with the national government.

“In the interest of public welfare, all LGUs are further strongly urged to suspend or discontinu­e the collection of fees such as, but not limited to, sticker fees, dischargin­g fees, delivery fees, market fees, toll fees, entry fees, or Mayor’s Permit fees, that are imposed upon all motor vehicles transporti­ng goods and passing through any local public roads constructe­d and funded by said LGUs,” EO No. 41 stated.

The order noted that “the unauthoriz­ed imposition of pass-through fees has a significan­t impact on transporta­tion and logistics costs, which are often passed on to consumers, who ultimately bear the burden of paying for the increase in prices of goods and commoditie­s.”

Even before the pandemic, producers and dealers of farm products including eggs, meats, vegetables and fruits had cited the passthroug­h fees as one of the factors behind high food prices. Instead of seeing the practice ease, the COVID mobility restrictio­ns appeared to have expanded and institutio­nalized the collection of such fees.

Marcos’ EO was meant to address the problem. The national government will have to find a way of encouragin­g compliance by LGUs, through a combinatio­n of carrot and stick. Redundant and onerous local fees and business requiremen­ts have also been cited by major investors and micro entreprene­urs alike as among the biggest hindrances to doing business in this country. Such complaints add to the other factors that have made the country progressiv­ely lag behind most of its regional neighbors in attracting foreign investment­s.

President Marcos has vowed to implement reforms across the food value chain. At the start of the year, the government should review LGU compliance with the suspension of the pass-through fees.

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