The Motor Vehicle User’s Charge (MVUC), otherwise known as road user tax, is a fee imposed by the Land Transportation Office (LTO) through the registration fees of vehicles and penalties for overloading. The collected funds are deposited under four (4) special trust accounts in the National Treasury. These funds are earmarked solely and used exclusively as a new source of funding to finance various government-managed projects and initiatives related to environment safety, road safety, infrastructure, and transportation development. In particular, it is used to fund projects geared towards the improvement of road networks, maintenance, and enhancement of safety measures for motorists and pedestrians, as well as advocacies like air pollution control.
Understanding where and how much of these LTO-collected payments go is crucial for transparency and accountability in the use of LTO public funds. It will also help make the MVUC payments a little easier to make when the car owners know what they are contributing for when they pay the MVUC or road user tax to the LTO.
What is the Motor Vehicle User’s Charge (MVUC)?
The Motor Vehicle User’s Charge (MVUC) refers to the charge also known as the road users’ tax. It is imposed by the LTO through the registration fees of vehicles and penalties for overloading to help fund the maintenance of national and provincial roads and address the air pollution caused by vehicles. The MVUC fees varies depending upon numerous factors, including vehicle type, gross vehicle weight (GVW), and year model, among others.
For a complete list of MVUC fees depending on the vehicle type and size, you may check this article about LTO MVUC (Motor Vehicle User’s Charge) and Other LTO Fees.
Where Do the Collected Payments for Motor Vehicle User Charge Go
The road funds collected from the payment of the Motor Vehicle User’s Charge (MVUC) are integrated into the usual annual vehicle registration fees and penalties for overloading being collected by the Land Transportation Office (LTO) from the road users. The collected money is remitted to the Bureau of Treasury (BTr) and placed into four different special accounts in the National Treasury.
According to Republic Act (RA) 8794, the funds collected from the MVUC are placed in the following special accounts at the National Treasury:
Special Road Support Fund (80%)
The primary purpose of the MVUC is to generate funds that can be reinvested into the improvement of road networks, maintenance, and enhancement of safety measures for motorists and pedestrians. As such, a significant portion, about eighty percent (80%) of the MVUC is allocated to the Special Road Support Fund (SRSF).
The funds collected under the Special Road Support Fund (SRSF) are designated for specific purposes: seventy percent (70%) of which is allotted for the maintenance of, and the improvement of drainage of national primary roads. The remaining thirty- percent (30%) is allocated and used for the maintenance, and improvement of drainage of national secondary roads throughout the country. This includes repairs, upgrades, and the construction of new roads to enhance connectivity and facilitate smoother traffic flow, fixing potholes, resurfacing roads, and constructing new highways. to improve the quality of roads, ensuring smoother and safer travel for the benefit of the very individuals contributing to the fund through their vehicle registrations.
Special Local Road Fund (5%)
The Special Local Road Fund (SLRF), is one of the four accounts apportioned from the MVUC for the specific use of the provincial and city governments. The allocation takes 5% of the MVUC and the apportioned fund may vary depending upon the local vehicle population and size of the road network under the respective jurisdiction of the LGU.
The funds under the SLRF are allocated for the exclusive use of LGUs for maintenance of local roads, traffic management and road safety devices as well as the following projects:
- Carriageway Maintenance
- Pavement Maintenance
- Bridge and Structure Maintenance
- Roadside Maintenance • Shoulder Maintenance
- Drainage Maintenance
- Vegetation Control
- Traffic Services Maintenance
- Preventive Maintenance
- Pavement Resurfacing
- Concrete Reblocking
- Seal Widening
- Preventive Works
- Rehabilitation, and Improvement
- Emergency Reinstatement
- Road Management
- Road Safety
- Drainage Improvement
- Rehabilitation plus Improvement
- Emergency Reinstatement
- Professional Services and Administration
- Safety Devices (Installation and Operation)
- Safety Projects
- Road Safety Education & Training
- Road Safety Management
Special Vehicle Pollution Control Fund (7.5%)
Another crucial area where 7.5% of MVUC funds are allotted is environmental conservation. As vehicles contribute to air and noise pollution, the government sees it fitting to invest in projects that mitigate these environmental impacts. Funding from the MVUC Special Vehicle Pollution Control Fund may be allocated to initiatives such as planting trees along highways, implementing emission reduction programs, and supporting research, developing eco-friendly transportation solutions and other initiatives aimed at minimizing the environmental impact of transportation.
Special Road Safety Fund (7.5 %)
Moreover, the remaining 7.5% of the MVUC is earmarked for road safety projects, programs, and initiatives. This includes paying for the cost of installation of adequate and efficient traffic lights and road safety devices where such traffic lights and safety devices are needed. This fund also covers campaigns to raise awareness about safe driving practices, education on traffic rules, and the implementation of measures to enhance safety and reduce road accidents, injuries, and fatalities through targeted efforts such as driver education and awareness campaigns in an effort to create a safer environment for both motorists and pedestrians, ultimately reducing the societal and economic costs associated with road accidents.
By channeling MVUC funds into these key areas, the LTO aims to create a comprehensive and sustainable transportation system that addresses both immediate challenges and long-term development goals. It’s important to note that the specific allocation of MVUC funds can vary depending on the vehicle registrations and penalties collected by the LTO. Government agencies in charge of utilizing the funds, as well as the LGUs must tailor their distribution based on the unique needs and priorities of their transportation systems. Transparency in the allocation process is crucial, and those who will use it are expected to be responsible in providing reports or updates to the public detailing how these funds are utilized.
MVUC Fund Management
The funds collected from the MVUC charges and overloading penalties may go straight to the National Treasury, but three of the four special accounts in the National Treasury for these funds are earmarked for the exclusive use of the Department of Public Works and Highways (DPWH) for road maintenance, installation of adequate and efficient traffic lights and road safety devices. The fourth special fund account allocated for air pollution control is managed by the Department of Transportation (DOTr).
The use of the funds collected under the MVUC law may be clear enough, but the law also created the Road Board and the Road Board Secretariat (RBS) to manage and utilize the special funds efficiently and prudently. With the help of the Road board and the RBS, the board decides and handles the day-to-day operation and management of the special funds within reasonable bounds.
In short, the collection and allocation of MVUC by the Land Transportation Office plays a vital role in shaping the quality, safety, and sustainability of a country’s transportation system. With these funds directed toward road infrastructure, safety programs, environmental conservation, and public transportation initiatives, the LTO, along with the Department of Transportation (DOTr) and the Department of Public Works and Highways (DPWH), can help create a more efficient, secure, and environmentally friendly transportation landscape. Likewise, citizens are encouraged to actively engage with the information provided by transportation agencies to ensure transparency and hold authorities accountable for the responsible use of these funds.