Of road subsidies and sustainability, plus others
The Philippine Star
September 16, 2002

The Road Users Tax or RUT funds are missing!

I received a letter from former Rep. Danilo S. Suarez, principal author of House Bill No. 6863 that called for the imposition of RUT. He writes: "I read with interest your Aug. 30, 2002 column wherein you extensively discussed the Road User’s Tax (RUT). For the reader’s information, RUT is synonymous with the Motor Vehicles User’s Charge or MVUC.

"RUT was used in the original version of House Bill 6863 but after a series of committee deliberations and public hearings, it was changed to MVUC to erase whatever misconception the public may have if the imposition would be called RUT."

Suarez continues to write that the bill had two-pronged objectives: Revenue-generation and as a corrective measure.

As a revenue-generating measure, the MVUC was envisioned to generate P4.5 billion in income for the government which would be earmarked for the three specific accounts, namely: 1) The Special Road Support Fund under the Department of Public Works and Highways (DPWH): 2) the Special Road Safety Fund under the Department of Transportation and Communications (DOTC); and 3)the Clean Air Fund under the Department of Environment and Natural Resources (DENR).

As a corrective measure, the bill was intended to address the weakness of the then existing Private Motor Vehicle Tax (PMVT) under Executive Order 43 and the registration fees under Batas Pambansa 74.

"The rates of the former schedules of PMVT and registration fees remained unchanged for the past 12 years and 18 years, respectively," according to Suarez. "This happened despite increase by almost 300 percent for the last 18 years of the government’s expenditures in maintaining 66,835 Equivalent Maintenance Kilometrage (EMK) of all national roads and bridges all over the country."

Special accounts remain empty

So it was with much disappointment that Suarez reports that "despite the enactment into law of said proposed measure, "funds collected from said law have not been channeled to the special accounts as mandated.

"As the principal author of HB 6863 in the House of Representatives and as former Chairman of the House Committee on Ways and Means which deliberated on the bill and worked with the Senate in crafting the final version, I made constant inquiry with the Department of Budget and Management on how the proceeds of the RUT have been used.

"I was informed that these funds went to the General Fund in the National Treasury and have been treated as national funds in violation of the clear mandate of Republic Act 8794 to dedicate the proceeds to stated special accounts, namely the Special Road Support Fund, Special Road Safety Fund and the Clean Air Fund."

I share this disappointment with the former congressman, especially after pinning hope that the law would be a sustainable measure in alleviating some of the drain that the government experiences from maintaining the country’s road network.

Overburdened taxpayers need to know where the money went

I also share the same concern raised by the former lawmaker when he wrote: "I believe that the public deserves to know what happened to this matter. In the past, associations of jeepney drivers, bus operators and taxicabs as well as representatives of commuters had voiced out their concern on the possibility that these fund would not serve their purpose."

It seems the fears of our taxpayers were not without basis. Suarez comments, "Your article, in effect, reflects the quintessential case of a concerned taxpayer who inquires on where taxpayer’s money is being used and a concerned motorist who wants to know whether or not the government has properly used the funds in accordance with the clear mandate of the law.

"The objectives of RA 8794 are noble and commendable and I honestly believe that if the proceeds of this law would be utilized properly as mandated, our perennial problems on poor road condition, air pollution and monstrous traffic situation would be properly addressed."

SEC cracks the whip on pre-need industry

Fe Eloisa C. Gloria of the Securities and Exchange Commission (SEC) kindly furnished me a copy of the materials that the SEC submitted to the Senate during the recent hearings on the pre-need industry.

After devoting a number of columns to the problems of this P150 billion industry, subsequent developments that highlighted undesirable practices by some pre-need companies had proved our fears to be the worst. This indeed was a nightmare for quite a number of pre-need plan holders.

In the report submitted to the Senate, the SEC said that drastic policy reforms were implemented in the last two years after the enactment of the Securities Regulation Code in 2000.

Among the new reforms introduced, effected almost a year ago, is the passage of new rules on the registration and sale of pre-need plans (including increasing paid-up capitalization and minimum trust fund deposit rates), the enforcement and implementation of critical provisions of the new rules, and the stronger networking with the Federation of Pre-Need Plan Companies, Inc.

Policing an industry that is quite unique to the Philippines has taken up much time and attention of the SEC over the last 25 years. It is heartening to note that tighter rules have pared by half the number of registered companies, from 91 to 46. A total of 22 companies have permanently closed shop, and another 23 have temporarily ceased operations.

There are still some glaring problems that would make interesting material for another column, but at the moment, we’ll keep our comments on hold.

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