Truckers were delighted to receive an early Christmas present last week as President Marcos took action to prohibit local government units (LGUs) from imposing significant “pass-through” fees on motor vehicles using national roads for transporting goods. This move is expected to lead to lower prices of essential goods and benefit consumers who are struggling financially.
In Executive Order No. 41, issued on September 25, LGUs were strongly advised to suspend the collection of various additional charges, such as sticker fees and mayor’s permit fees, imposed on vehicles using local public roads for transporting goods, in the interest of public welfare. President Marcos emphasized in the EO that the unauthorized imposition of pass-through fees increases transportation and logistics costs, which are ultimately passed on to consumers, putting the burden on them to pay for the increased prices of goods.
The Alliance of Concerned Truck Owners and Organizations (Actoo) fully supports this action, as LGUs have been inventive in charging various fees within their power under the Local Government Code of 1991. Actoo Vice President Rina Papa stated that truckers in Manila, where transportation activity is highest due to the presence of major international and local ports, pay a road user’s fee of P2,000 to P2,500 per month or up to P30,000 per year. Additionally, when these trucks transport goods to the provinces, they face an additional pass-through fee of at least P675, depending on the LGU. Some provinces even require trucks to purchase stickers or obtain permission as they pass through checkpoints. All of these unnecessary fees imposed by LGUs contribute to higher retail prices of goods.
However, it remains to be seen if the provisions in the EO will result in action on the ground, as similar directives have been issued in the past without effective enforcement. As far back as 2006, the Department of the Interior and Local Government (DILG) has repeatedly stated that the collection of these pass-through fees is illegal. Despite issuing multiple circulars on the matter, the collection has continued. Local Government Secretary Eduardo Año expressed frustration, saying, “For the nth time, desist collection.” Even the Anti-Red Tape Authority (Arta) intervened in 2021, signing a joint memorandum circular with the DILG and the Department of Finance to prohibit the collection of these fees, but the illegal collection persists.
The biggest challenge for the Marcos administration is to ensure strict enforcement of the EO to prevent unauthorized fees from being collected by LGUs. The Manila government has already taken a step in the right direction by suspending the collection of pass-through fees, even before the guidelines for EO implementation were issued. This should serve as an example for other LGUs to promptly comply with the national government’s directive, which will help reduce logistics costs.
George Barcelon, President of the Philippine Chamber of Commerce and Industry, highlights that logistics account for 26 percent of production costs in the Philippines, compared to the average of 15 percent in other Asian countries. This difference is mainly due to the Philippines being an archipelago, necessitating land, sea, and air transportation for goods. The additional fees imposed by LGUs along delivery routes only exacerbate the situation. Therefore, with the Marcos administration’s commitment to reducing business costs, LGUs must play their part and comply. This will help lower prices of essential goods, produce, and merchandise just in time for Christmas.
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