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FOR
former pop singer Claire de la Fuente, part of the
legacy left by her husband, who passed away late last
year, is a case filed by the Bureau of Internal Revenue
(BIR) against Philippine Corinthian Liner.
The
case, which is pending with the Department of Justice,
is primarily one of tax assessment.
Under
the Comprehensive Tax Reform Act of 1997, the minimum
quarterly gross receipts of each public-utility bus
(PUB) with a seating capacity of more than 50 passengers
is pegged at P21,600. Paying anything higher than the
3-percent common-carriers tax of P648 is voluntary.
“It’s
hard to know how much bus companies make. We still don’t
have a benchmark for PUBs the way we do for taxis,”
ruefully admits Jose Mario Buñag before his resignation
two months ago as BIR commissioner.
Nevertheless, using inflationary growth since 1978 as a
guide, the BIR has hiked, effective August 1, the
minimum quarterly gross receipts of all public-utility
vehicles (PUVs), including taxis and buses, by an
average of 2,600 percent.
This
means the BIR has increased the minimum gross receipts
for a PUB with more than 50 passengers to P591,300 per
quarter, from which the BIR will collect a common
carriers tax of P17,739.
Assuming
that all 3,400 PUBs counted by the Metro Manila
Development Authority (MMDA) have seating capacities for
more than 50 passengers, this means the BIR will be able
to collect P60.3 million every three months in Metro
Manila alone, compared with the P2.2 million in previous
quarters.
And the
revenue numbers could even be bigger, depending on which
data the BIR uses. Based on 2006 data from the Land
Transportation Office (LTO), nearly a fourth, or 5,457,
of the country’s PUBs, excluding school buses, shuttle
buses and tourist buses, do business in Metro Manila.
The
Japan International Cooperation Agency (Jica) estimates
that there are close to 5,000, while the updated count
of the Land Transportation Franchising and Regulatory
Board (LTFRB) is 3,800, half of which are
provincial-based.
“The
real number is probably that of Jica, plus or minus 30
percent,” LTFRB chairman Thompson Lantion says, tracing
the variance to two industry practices. One is called “buntis,”
where five buses currently share one government license.
The other is the “colorum,” where a bus does business
where it is not authorized to go or is trip-cutting.
Profit
factors
“Buses
are not making as much money as in the late 1990s, and
the new BIR regulation will eat further into our
margins,” says Provincial Bus Operations Association of
the
Philippines
president Homer Mercado.
There
are, of course, the usual suspects that are blamed for
lower profits. Fare hikes are regulated by the LTFRB,
which has oftentimes weighed in favor of the commuting
public. For instance, the last time the fare for
air-conditioned buses was increased was in May 2005,
when diesel was selling at P27 a liter.
“For us,
a comfortable diesel price is P27.50 a liter, although
we can still absorb the loss if the price goes up to P31
a liter,” says Mercado.
Many bus
operators also like to cite the country’s fare structure
as one of the lowest in Southeast Asia, which may have
been true 10 years ago, but not necessarily always so
today.
Take,
for instance, the bus fares in Thailand’s capital. The
lowest fare for a nonair-conditioned bus in
Bangkok
is 5 baht, or P7.50 (an average rate of P1.50 to a
baht), lower than Metro Manila’s minimum fare of P8; for
an air-conditioned bus,
Bangkok
charges a minimum of 7 baht, or P10.50, while Metro
Manila’s minimum is slightly lower at P10.
Despite
such difficulties, industry players privately place
profits at 40 percent of gross sales for
provincial-based companies with Metro Manila routes, in
large part because of higher fares charged for longer
distances traveled and because more seats are sold
entering and leaving Metro Manila.
Metro
Manila-based bus operators net a lower 30 percent, after
deducting 60 percent on operating expenses, such as fuel
and personnel, and another 10 percent on spare parts and
other expenses.
City-based buses also face stiff competition from the
mass transit system, which provides subsidized pricing,
predictability, deliverance from traffic and
cleanliness.
Consequently, PUB ridership along Metro Manila’s most
profitable circumferential road, Edsa, is now placed at
only 100,000, while the MRT-3 serves 450,000 commuters
everyday.
Demand
and supply
Even as
Metro Manila further expands its train network, the
government wants to reduce the number of PUBs to as low
as 1,000 units over a period of years. A key component
to regulating supply is the proposed congressional
amendment to Commonwealth Act 146, or the Public Service
Act, particularly the provision on the duration of a PUV
franchise.
“The
process of PUB franchising is to eliminate excess buses.
I want the franchise to be good for only five years,
renewable up to 15 years, depending on the franchise
holder’s fleet, modernization program and
consumer-service record. Before I leave, I want to have
an industry fleet that is not more than 10 years old,”
says LTFRB’s Lantion.
Sixty
percent of the country’s passenger buses, all of which
are privately owned, are currently between 11 years and
15 years old. Industry refleeting is placed at only 10
percent a year, in part because even a brand-new
China-made bus, which is already 20 percent to 30
percent cheaper than a similar but secondhand unit from
Japan, still costs between P2.6 million and P5 million.
Industry
players say 70 percent of any refleeting program has to
be bank-financed.
“To some
extent, I agree that there is oversupply because of the
presence of ‘colorum’ units. The principle of
franchising, however, assumes there is demand if there
is adequate cash or revenues generated. Since there is
no doubt that bus companies are making money, there is
no oversupply,” says Primitivo Cal, a former public
works and highways undersecretary and current dean of
the University of the Philippines’ School of Urban and
Regional Planning.
A quick
indication of demand is the price of an existing
franchise. Distance is a factor. Contrary to public
perception, Baguio is a more lucrative route than Metro
Manila, where a bus averages less than 1.8 trips a day
at a bus-run of 162 kilometers because of heavy traffic.
Competition is another factor. For example, a Visayas
franchise can be sold at between P200,000 and P250,000
per bus unit because there are fewer players.
These
are, of course, loose-change numbers for the BIR, which
is tasked to collect P765.8 billion this year. For the
BIR, however, every P1 million collected helps. |
