The Market Monitor Minding the Nation's Business
By Riza Lozada
From 2001 to 2014, the so-called road users’ tax or the Motor Vehicle User’s Charge (MUVC) raised a total of P112.5 billion against releases of P105 billion resulting in P7.5 billion balance in the fund, a study made by government think tank Philippine Institute for Development Studies (PIDS) showed.
PIDS noted that the controversial fund has been tainted with allegations of misuse and politicized allocation.
“For example, a 2009 World Bank study noted that a high share of MVUC funds was used to fund employment-generating roadside maintenance programs such as sweeping, beautification, and planting,” it said.
The PIDS study said greater transparency and accountability among government agencies involved in the program is needed to improve the effectiveness and efficiency of the collection and disbursement of the MVUC fund.
The MVUC, which is imposed through the registration fees of vehicles and penalties for overloading, and collected by the Land Transportation Office (LTO), was intended to raise funds to finance road maintenance and minimize air pollution.
The MVUC is considered the third biggest source of tax revenue for the government, contributing 40 percent of available funds for maintenance of national roads.
According to Republic Act (RA) 8794, funds collected from the MVUC should be placed in four special accounts in the National Treasury: 80 percent for the Special Road Support Fund, 5 percent for the Special Local Road Fund, 7.5 percent for the Special Vehicle Pollution Control Fund, and 7.5 percent for the Special Road Safety Fund. The tax forms the bulk of the annual motor vehicle registration.
The law also created the Road Board to ensure the prudent and efficient management and use of the Motor Vehicle User’s Charge fund.
It is assisted by the Road Board Secretariat (RBS) that is responsible for the implementation of the board decisions and the day-to-day operation of the management of the special funds.
In a recent forum at the House of Representatives, PIDS Consultant Ma. Sheilah Napalang, who is also director of the UP National Center for Transportation Studies, noted that the recording of MVUC deposits can be made transparent and efficient through automation, regular reconciliation of records of the Land Transportation Office (LTO) and Bureau of the Treasury records, and random audits.
She added that automating the recording and encoding of collections and deposits would reduce human errors.
Napalang also pointed out the lack of a definitive operating procedure system in identifying and prioritizing projects under the MVUC fund.
“Based on the discussion by the PIDS study team with the different Road Program Offices (RPOs) of the Department of Public Works and Highways (DPWH), it was intimated that projects are proposed by the District Engineer Office (DEO) or the Regional Offices and not generated by DPWH RPO using the Highway Development and Management model-4 (HDM-4) as stipulated in the MVUC Act,” she said.
“This also validates the 2011 finding of the Commission on Audit on the ‘lack of effective procedures by the Planning and Evaluation Division (PED) of the RBS in the evaluation of 1,011 projects amounting to PHP 7.99 billion’,” Napalang added.
The PIDS study recommended that for the special accounts under the DPWH, planning, programming, and project proposal development must be done within the DPWH itself.
Also, the process should conform with RA 8794 that created the MUVC, wherein DEOs and RPOs must submit their proposed projects to the DPWH Central Office and that projects are prioritized using HDM-4.
In terms of approval and release, Napalang highlighted the lack of a systematic way for proponents to track their proposals due to the considerable time gap between a request for the project and the eventual release of the Special Allotment Release Order.
She also pointed out the incapacity of the RBS to undertake monitoring and evaluation of MVUC projects, given its limited technical personnel.
To solve these issues, the study recommended that information system and communication channels with local government units (LGUs) be strengthened, particularly regarding conditionalities and eligible work categories.
The study also recommended the establishment of a monitoring system to facilitate project implementation, monitor early warning signals on possible implementation problems, and recommend ways to fast-track implementation. The auditing system by the RBS must also be strengthened and a third-party audit setup must be explored, according to the study.
To enhance transparency, the PIDS study suggested that information on projects undertaken for the last five years be published on the Road Board website, along with a clear timeline from submission of project proposal to the board’s approval or disapproval.
Another recommendation was to require project proponents to have an appropriate impact evaluation plan, where expected outputs and outcomes are stated.