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MRT Fare Hike and Fair Government Subsidy

The point on fare subsidy where the government in fact shoulders a big portion of the train fares, to keep the fares affordable for the public (~Php10-14 range). They say that at this fare rate, subsidy per passenger is already around ~Php30-40 and this translates to Php7-8B annual subsidy.

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News on the need to increase MRT fares has been ongoing ever since PNoy was seated as President (or maybe even earlier), and until now, it has remained as a proposal and as news. No concrete plans yet, no set dates yet. Only news and rumors.

The rationale? Well for one the train systems are definitely under-capacitized and over-utilized, especially the EDSA and Taft lines. In Filipino, siksikan na parang sardinas (crowded like sardines in a can). There’s no doubt that the trains still beat the traffic jams in EDSA and Taft during rush hours, but the volume of train riders is simply overwhelming when matched with the train capacity. Outnumbered. Trains are overused and overloaded leading to faster deterioration and depreciation, which in turn lead to more costly maintenance.
 

There’s also the point on fare subsidy where the government in fact shoulders a big portion of the train fares, to keep the fares affordable for the public (~Php10-14 range). They say that at this fare rate, subsidy per passenger is already around ~Php30-40 and this translates to Php7-8B annual subsidy. Some proponents also argue (not sure if PNoy also used this argument) that only NCR commuters benefit from the trains whereas government funds came from all parts of the country, to the effect that taxes from the provinces are partly paying for the MRT subsidy which is not fair. If that’s the case, then I agree that the subsidies should be shouldered by NCR tax collections, and provincial collections be used for provincial development.

In a radio interview this morning, Sen Ralph Recto, Chairman of the Ways and Means Committee in the Senate, mentioned a number of agreeable points. One, the argument on provincial taxes being used to finance the MRT subsidy should not be used. He said that tax collections alone from 3 big NCR cities (Manila, QC and Caloocan) already amount to ~Php280B, which is already enough to cover the MRT subsidy, roughly speaking. Another is that a fare hike with such poor service levels, is like rewarding inefficiency, which should not be the case. He also noted that timing of a fare hike may not be a good move right now given the various rise of prices in other commodities. And that the government has been spending less and less lately to lessen the budget deficit (so they have extra money right now), and why not use this money to spur economic growth.

 

Again, if this is the case, then I’d like to agree with Sen.Recto. If we are to locate the biggest tax collection source in the Philippines, it will come from NCR. Now if the NCR taxes is not enough to cover NCR spending, then it’s a different discussion. Taxes from the provinces should not be used, instead NCR must be able to generate more funds for itself. 

 

 
In fact, in my personal opinion only, government spending in NCR may already be too big whereas spending on the provinces remain very small. Is this tied to the tax revenues generated per area? Proportional allocation and spending? Is there such a policy, that tax collections per area must be used in that area only? I know that’s the fair stance, but I’m not sure if there’s a conscious effort on the part of the government to observe that. And what about those areas with very minimal tax collections due to population and economic activity? No allocation so no chance to grow? Tough balancing act I must say.

 

 
When Sec.Mar Roxas was appointed as DOTC chief, he said that they’ll look into improving the service levels first, before increasing the fares (he even rode the MRT one time, not during the peak hours though). So that with improved services, we get the public’s buy in for additional fares. Again, I agree and I can’t wait to see that.

 

If one can actually note, bus fare from Cubao to Ayala (~Php18-20) is actually more expensive than the MRT. Factoring in the congestion and the daily wrestling we do in MRT, I still think that MRT is more efficient, fast and convenient. As such, pricing it near the levels of bus fares should remain reasonable.  Well, that’s just me.

 

 
So I guess, the ball is in Mar Roxas’ court now (Smart Araneta? Haha!). Can’t wait to hear his views on this. 

 

PS. I ride the MRT 5-6 days a week, so please, improve the services first before charging us with more. More trains, more frequent arrivals, less service disruptions and down times. 

 

 
PSS. How I wish the LRT along Aurora Blvd. is the one running along EDSA instead. It’s the fatest of all trains so it can carry a lot more passengers. It’s just that it’s too fat I suppose to fit in our EDSA railways.
 
PSSS. Not sure by how much, but with the increased fares if ever, there might be more and more people who will shift from SV users to SJ users. Which means more and more lines for them. Tsk tsk. Tough calls to be made by the government.
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About Geri (359 Articles)
Founder and main author. Husband, used-to-be-breadwinner, God-made multi-millionaire, employee, financial planner and adviser, investor, stocks trader, entrepreneur, agri-preneur, book author. Firm believer that all Pinoys deserve a richer life. Not a guru, but a forever student of the investments world, a work-in-progress.

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