The Market Monitor Minding the Nation's Business
By Luis Leoncio
A government study has confirmed that proceeds from the controversial road-users tax or the motor vehicle users charge (MVUC), considered the third-biggest source of tax revenue for the government that some legislators have long wanted to review since these were “prone to corruption,” are, indeed, not being efficiently used.
The study by the Philippine Institute for Development Studies (PIDS) showed that the funds were “underutilized due to the lack of a definitive operating procedure system on how to identify and prioritize projects.”
Earlier, Sen. Ralph Recto sought the itemization of the MVUC allocation in the national budget, saying the funds “remain a lump-sum devoid of details.”
Recto said he wanted the proceeds from the tax to be earmarked for the improvement of the mass-transportation system.
He recently filed Senate Bill 266 seeking the creation of a mass-transit system support fund by amending portions of the MVUC law or Republic Act 8794, which was enacted on June 27, 2000. The PIDS study said the processes of identification, approval as well as the implementation of proposed projects under the MVUC were problematic.
“Project identification does not follow the prescribed procedures. The approach is bottom up, rather than top down, that made it fail to incorporate a network perspective of accident black spots, and leading to projects that are not of the highest priority being approved and implemented,” the study said.
The MVUC is collected as an item in the registration fees of vehicles and penalties for overloading by the Land Transportation Office (LTO). It contributes an additional 40 percent of available funds for the maintenance of national roads and to minimize air pollution.
The law states that funds collected from the MVUC should be placed in four special accounts in the National Treasury, namely: the Special Road Support Fund (80 percent), the Special Local Road Fund (5 percent), the Special Vehicle Pollution Control Fund (7.5 percent) and the Special Road Safety Fund (7.5 percent).
The PIDS study pointed out that project approval and fund release under the Special Local Road Fund requires the prerogative of the city mayor, “leaving the process open to politicking.”
“Project implementation is, ideally, a coordinated effort among several government agencies and the Road Board. However, in reality, there is evidently a real potential of overlaps of functions, especially between the DPWH and the Road Board Secretariat,” the authors added.
They also cited the lack of transparency, given the absence of a clear schedule for proposal submission and approval of the projects. They maintained that this setup leaves the process open to political interference.
Aside from underutilization, the study also enumerated potential sources of discrepancy in fund collection, such as for the funds deposited as General Fund, due to incorrect agency and transaction codes and the lack of a list of deposited collections.
To solve these problems, the PIDS study recommended that MVUC collection be automated to efficiently track collections and deposits.
“Implementing agencies should make the effort to adhere to RA 8794’s Implementing Rules and Regulations, especially concerning the steps of proposing projects to the Central Office, and prioritizing selections using the Highway Development and management (HDM-4) model, which makes sure that the projects are economically viable and ascertains that road-users benefit the most,” the study suggested.
Similarly, the authors said the guidelines for identifying and prioritizing projects that would be funded through the Special Vehicle Pollution Control Fund should be approved and implemented.
To improve monitoring, the authors suggested that project proposals and current projects as well as those undertaken during the past five years be published online, thereby establishing a “clear timeline” following proposal to the final decision of the Road Board.
The study said institutionalizing impact evaluation and monitoring would help transparency issues, and, at the same time, improve the decision-making process. Using performance indicators during monitoring and evaluation of projects is highly encouraged as well, they said.
The authors also enumerated further institutional reforms: setting up an oversight committee for the MVUC to ensure adherence to the the law, encouraging the Road Board to focus its time on “monitoring and evaluating project implementation and outcomes,” and leaving the procurement and project implementation to other agencies such as the Department of Public Works and Highways.
Lastly, the authors underscored capitalizing on the potential of a community-based labor approach on road maintenance. Highlighting the performance of Bantay Lansangan project and the details of the Road Sector Status Report Card, the authors suggested the strengthening of “community-based employment in road maintenance projects” and encouraging “the participation of civil-society organizations in monitoring and increasing transparency in road projects.
The authors of the study were PIDS Consultants Sheilah Napalang and Pia May Agatep, PIDS Senior Research Fellow Adoracion Navarro, and Research Associate Keith Detros.
Militant lawmakers, led by Bayan Muna Partylist Representatives Neri Colmenares and Carlos Isagani Zarate have long been seeking the abolition of the MVUC. “Since it was enacted, the MVUC has been a burden to motorists, especially to those who operate the public utility vehicles such as jeepneys, taxis and tricycles because it further reduces their take-home pay due to the rising costs of fuel, tolls and the proliferation of corrupt officials that continuously milk these helpless drivers and small-time operators,” Colmenares said. He said the MVUC has also turned into a “presidential pork barrel that does not have any congressional oversight.”
The Commission on Audit (CoA) in a report on the MVUC collections for 2014 said about P1.2 billion worth of projects approved by the Road Board and funded from road-users’ tax collections were marred by “various deficiencies.” “Our audit disclosed various deficiencies in the management and disbursement of the MVUC funds,” the COA said. Among the irregularities cited by the COA was the failure of the Road Board to ensure the utilization of the P199-million worth of motor vehicle inspection system (MVIS) equipment that were purchased for the Land Transportation Office (LTO). “Despite prior years’ audit recommendations, the [MVIS] remained either underutilized or idle, defeating the purpose for their procurement to control and manage air pollution and thus resulting in wastage of government funds,” the state auditors said.