Recto: LTO creating ‘lucrative downstream industry’ with new fees

Many new fees imposed by the Land Transportation Office, some with dubious legality, are creating a “lucrative downstream industry” as a result of their privatized implementation, according to Senate President Pro Tempore Ralph Recto.

Recto says the Motor Vehicle Inspection System creates an P8-billion annual industry, and the mandatory enrollment in driving schools as a prerequisite in taking a driver’s license test has the potential of earning P7.5 billion a year for their owners.

“These are only two out of the many, Recto said.

“It is unfair and premature to call these ‘money heist’ ventures, because as I have said, the objectives are laudable but the implementation is far from lovable.”

He cited the case of the new rules in securing student permits and licenses for first-time drivers, which now require them to be a graduate of a theoretical and practical driving class from either private driving schools or in-house classes that the LTO holds.

“The problem is there are only a few LTOs, so most are funneled to private driving academies, which have been mushrooming ever since the order was issued,” Recto said.

He says the law cited by the LTO’s MC 2019-2176—making mandatory the submission of driving school certificate—does not call for such.

“Although you scrutinize RA 10930, there is no explicit provision authorizing the LTO to impose the driving school diploma rule. This is a case of an overreach,” Recto said.

“What is important is you passed the test with honesty and without cheating and no hocus-pocus.”

Recto says theoretical driving course fees now average P2,875. The course is free if taken at the LTO’s Driver’s Education Centers, and the cost for handouts is around P370.

In 2019, the LTO issued 2,614,976 student permits.

“If the same volume holds true in the coming years, then driving schools are looking at a P7.5-billion annual market.

“Another sector in the LTO’s fee industry whose earnings have been turbocharged courtesy of new requirements is the MVIS.”

Recto says there are 12.15 million different kinds of vehicles registered in 2019.

Based on the payment for the inspection of all vehicles, the private sector could earn up to P8.1 billion annually. And that would even have increased as there are more numbers of vehicles,” Recto said.

For a multi-point examination of a vehicle’s roadworthiness, an MVIS center charges P1,800 per car and SUV, P600 for motorcycles and P300 for public utility vehicles

He said the LTO should have “finessed the fees before dropping them like a bomb.”

“First, may isang suggestion na baka pwedeng i-pilot doon sa mga lumang sasakyan. Second, wala bang public alternative na mas mababa ang singil, pero may konting kita ang gobyernong baon sa utang?” he said.

“The profit and ROI for the private businesses that implement this government rule is high. So if the government is willing to spend P357 billion for a subway that will bleed subsidies, then why can’t it modernize the LTO’s own inspection system so it can help defray the social cost of car ownership?”

Recto has filed Senate Resolution 638, which seeks to suspend the operation of Private Motor Vehicle Inspection Centers nationwide until comprehensive public consultation has been conducted.

“At this time of the pandemic when the people are facing a health crisis and an economic downturn that is causing suffering, fear and anxiety, our people should not be further burdened by regulatory measures with questionable procedures imposing exorbitant fees with doubtful effectiveness, and implemented without proper public consultation,” he said in the proposed resolution.

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