Noynoy junks Senate plea to defer MRT, LRT fare hikes

Malacañang rejected yesterday persistent appeals made by members of the Senate for the administration to defer until next year the implementation of its plan to cut its subsidy on the Metro Rail Transit (MRT) and Light Railway Transit (LRT) Systems and increase fare cost.

“I think this is a matter of explaining to the public and also to the senators why, number one, the subsidy will continue. The subsidy will only be diminished—let me be clear on that. But I think it’s also important to know that a continuous subsidy would not really, in the long run, be beneficial to the government coffers and also to the taxpayers,” said presidential spokesman Edwin Lacierda as he noted that the current level of subsidy is just way too much.

“We could use that subsidy elsewhere for other programs of the government. What we are trying to do is only to approximate the MRT fares to the bus fares, for now,” he said.

Lacierda stressed that while the fare increase is inevitable, the Department of Transportation and Communications (DoTC) Secretary Mar Roxas, is also committed to make sure that the facilities and services of the MRT and LRT systems are in good running condition.

He noted that in long run, the subsidy cut will be more beneficial for a greater number of people and not only those using the MRT and LRT systems as he stressed that the government “can use part of that subsidy for other programs too.”

Lacierda, and for that matter, President Aquino and his aides, always claim that subsidy funds, as well as other funds slashed from the budget always will be used for other programs, but they never identify just which programs and projects are to be funded by whatever amount is being saved for such purposes.

Aquino had also earlier declared that the MRT and LRT fare hike is inevitable while assuring that the increase will just be at par with the current rate being charged by Metro Manila buses.

He claimed that the fare hike would be more beneficial to the public because this would mean lesser government subsidy for the MRT and the two LRT systems,

Malacañang claims that the government allots around P7.2 billion in national funds just to subsidize the operations of the MRT and the LRT.

It is estimated that without any subsidy, passengers would have to pay P60 per ride but since the government is providing subsidy, the actual fare only costs P15 per ride.

This means that tax payers, including those who are not in Metro Manila and are not using the MRT and the LRT, have been subsidizing passengers at a cost of P45 per person for every ride, the Palace insists.

But even as a majority of senators came up with a resolution for the Palace not to cut the subsidy, Aquino ally Sen. Franklin Drilon yesterday openly stood against the position taken by almost half of his colleagues.

He said he was not in favor of the resolution because “we have to look for funds. It’s either we increase the taxes and maintain the subsidy in order to maintain our budget deficit. What I’m saying is let’s have new revenues and we can continue to subsidize,” Drilon said in reference to resolution No. 602 filed by 11 senators Tuesday.

Among the “brains” behind the said resolution include Drilon’s own political ally in the Liberal Party (LP), Sen. Ralph Recto who was ably supported by Senators Manuel Villar Jr., Joker Arroyo, Francis “Chiz” Escudero, Loren Legarda, Ferdinand Marcos, Antonio Trillanes, Senate President Juan Ponce Enrile, Majority Leader Vicente Sotto III and Senate President Pro Tempore Jinggoy Estrada.

The resolution expressed the sense of the Senate for the deferment of the implementation to increase the fares of LRT and MRT and suspend the implementation of 12 percent value-added tax (VAT) on toll fees.

Drilon, chairman of the Senate finance committee, predictably defended the position of the Executive to lift the subsidy of commuters of MRT-LRT fare in light of addressing the ballooning budget deficit.

“If you look at the budget, we are on a deficit. The budget is just an authorization to spend. That’s what a budget is all about. The authorization to spend this year, for example, is P300 billion more than the revenues that we have. That’s why we are on a deficit and it can worsen. Fiscal prudence will dictate you have to reduce the deficit. There are ways to reduce the deficit: increase the taxes, maintain the subsidy at its current level, or reduce the subsidy and maintain the present tax rates. You have only one economic pie to distribute. How big that pie is the determining factor,” Drilon explained.

“We need funds. Where do you think we’ll get the funds? From taxes. That’s the reality. Do not charge VAT (value-added tax), do not increase fare, fine. But the question we ask: we have to reduce the deficit, we have to have funds to subsidize. It’s a policy issue. Where do you source the funds? Either you increase the fare or increase the taxes. you cannot pick this thing out of the thin air. That’s the reality. It’s either we increase the fare, or increase the taxes,” he said.

“It’s a policy issue. This administration believes that if we are able to reduce the subsidy we can provide more services to the poor,” he added.

Drilon emphasized that as long as funds are properly used, there is no reason to worry.

“There is an adjustment period. We are on the right track by using the funds properly.

Recto yesterday, filed Senate bill No. 2914 which seeks to exempt toll operations from the 12 percent VAT.

Enrile had earlier said that toll fees should no longer be subject to VAT as both are in the nature of taxes.

“Toll fees are known to be tax and you cannot impose a tax on a tax. That is what I learned in my taxation course both in UP (University of the Philippines) and in Harvard,” Enrile, a known tax lawyer said.

Since the high court already issued a decision, considered as an interpretation of the Constitution, there has to be a new law to override this ruling, Enrile said.

Such is the very nature of Recto’s proposed legislation “to clear the ambiguities in our tax statutes on whether or not toll operatiors are subject to the 12 percent VAT.”

“The position now taken by the BIR (Bureau of Internal Revenue) holding toll operators liable is a breach of campaign promise that this administration shall not impose new taxes amid the incessant fuel price hike. It has also serious implications on the public-private partnership (PPP) as the core of economic resiliency plan of our present government,” he said.

“The bill settles whatever doubt in the interpretation and construction of our tax statutes as to whether or not toll operators are subjected to VAT. It will also underscore the legislative policy exempting toll operators from VAT which, according to the SC, must be expressly provided for by law,” Recto added.

Escudero the said resolution, said the MRT-LRT fare increase can be aborted if the two agencies will restructure their operational contracts.

Escudero, who has been opposing the proposed train fare increase, said there are a lot of existing options that the DoTC can explore to address the huge subsidy it continuously shoulders for the rail transport systems.

Early this year, Escudero had asked the LRT and MRT administrators to submit to his office a full accounting of their revenue sharing from advertisements and lease operations. The two agencies have yet to comply.

Meanwhile, two petitioners are asking the Supreme Court (SC) to issue anew the temporary restraining order (TRO) it issued stopping the imposition of a 12-percent value-added tax on tollway charges.

In a 25-page pleading, former Nueva Ecija Rep. Renato Diaz and former Assistant Secretary Aurora Maria Timbol of the Department of Trade and Industry reiterated their position that the Bureau of Internal Revenue has no authority to impose VAT on toll fees starting Oct. 1.

The high court earlier turned down Diaz and Timbol’s petition to declare unconstitutional BIR’s imposition of VAT on toll fees and lifted the TRO it issued on Aug. 13, 2010. –Virgilio J. Bugaoisan and Angie M. Rosales with Benjamin B. Pulta, Daily Tribune