Pass-through fees
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.