Why LRT/MRT fare hike will cause pain

When Mr. Estrada rode through the palace carried by a popular vote unheard of in our era, and surpassed only by Mr. Aquino, it began a decade that shifted towards populist policies. Populism never really took a backseat when the economist, Mrs. Arroyo took office. In fact, she used populist policies to help her maintain power through turbulent years.

The MRT for example is subsidized by the government. Now, unprepared to face the stark economic reality, our nation finds itself that projects entered into by the government can no longer be subsidized by the government.

It is easy enough to see the plight of the poor. Fare increase will without doubt reduce their already scant purchasing power. It isn’t like the poor have savings to speak of. They live from pay check to pay check.

There are two things people will do: scale back, or find more lucrative work. The latter difficult to find in the best of days, so all people will do is scale back.

Those who can’t afford the expense of the light rail will take other means of public transport.

The Jeepney drivers association should love this, right? They get more people riding.

It is the natural inclination of people in the Philippines to get the cheapest, and not the best. And enacting such subsidies only reinforced the notion. The problem of course stems from the very populist policies enacted in the first place. Someone always pays.

You can look at it this way. A subsidized MRT/LRT meant that even the taxpayer from Davao is paying for person riding on the LRT/MRT. Are patrons of the MRT/LRT entitled? An unsubsidized one now means that only the person who is actually using the service is paying for it.

There is… an alternative.

Some of the people who are pro-Charter Change have mentioned they are also Federalists. They are in favor of decentralization. There is already some level of autonomy granted to Local Governments, under the present Constitution. The National Capital Region accounts for nearly 40 percent of the economic activity in the Philippines. Perhaps, a portion of the tax revenue generated by Metro Manila ought to go to subsidizing the operation of the MRT/LRT. After all, it is Metro Manila’s workers and residents that use the service.

What is certain is that something can not come out of nothing. The National Government needs to be in many places that it can not afford to do so. What is certain is that fare hikes will cause pain but that doesn’t mean Metro Manila’s residents and workers owe other taxpayers any entitlement, nor does the state owe these riders anything as well. What is certain is that we should give to Caesar what is Caesar’s.

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Cocoy Dayao

Cocoy is the Chief Technology Officer of Lab Rats Technica, a Digital Consulting company that specialises in DevOps, iOS, and Web Apps, E-Commerce sites, Cybersecurity and Social Media consulting. He is a technology enthusiast, political junkie and social observer who enjoys a good cup of coffee, comic books, and tweets as @cocoy on twitter.

Cocoy is also the Managing Director and Editor-in-Chief of the ProPinoy Project.

Cocoy considers himself to be Liberal.

  • Firstly the MRT/LRT was built with private funds but with government guaranteeing a fixed rate of return of 15% to the private sector builders. Also return of capital was guaranteed.

    No matter what price the government charged there were already fixed costs.

    When it was first opened very few riders used the system. However things are different today. Gas prices are high and bus fares are high.

    Raise the fares based on distance covered and you will cover most of the subsidy being paid out in this take or pay project.

  • Manuelbuencamino

    Buses cost more than twice the MRT/LRT. And I’m pretty sure jeepneys do too in terms of fare per kilometer.

    Funny how some of the same people who are against CCT because it is a dole-out do not see subsidies as a form of dole-out as well

  • Manuelbuencamino

    Buses cost more than twice the MRT/LRT. And I’m pretty sure jeepneys do too in terms of fare per kilometer.

    Funny how some of the same people who are against CCT because it is a dole-out do not see subsidies as a form of dole-out as well

  • GabbyD

    “You can look at it this way. A subsidized MRT/LRT meant that even the taxpayer from Davao is paying for person riding on the LRT/MRT. Are patrons of the MRT/LRT entitled?”

    actually, its ok in principle for the govt to subsidize infrastructure. in fact, this is one of the reasons why govt exists.

    however, the MRT subsidy’s removal is the right thing 2 do coz:
    1) subsidies ought to go from the wealthy regions to the poor regions as much as possible. this maximizes the rationale of govt intervention in service delivery.
    2) from a budget deficit standpoint, if its possible to fund a service straight from the users, this ought to be preferred. the alternative, is to borrow, which ought to be avoided as much as possible.

  • GabbyD

    “You can look at it this way. A subsidized MRT/LRT meant that even the taxpayer from Davao is paying for person riding on the LRT/MRT. Are patrons of the MRT/LRT entitled?”

    actually, its ok in principle for the govt to subsidize infrastructure. in fact, this is one of the reasons why govt exists.

    however, the MRT subsidy’s removal is the right thing 2 do coz:
    1) subsidies ought to go from the wealthy regions to the poor regions as much as possible. this maximizes the rationale of govt intervention in service delivery.
    2) from a budget deficit standpoint, if its possible to fund a service straight from the users, this ought to be preferred. the alternative, is to borrow, which ought to be avoided as much as possible.

  • Prudence

    One selfish thought: I’m not in favor of the MRT/LRT price hike because more people will crowd the buses that I frequently ride hehe.

    Seriously though, I think it’s about time to increase the fare price. It’s been several years that it has stayed at that price level and we all know how everything skyrockets nowadays. I just wish more improvements should be made to compensate for the price increase.

  • Prudence

    One selfish thought: I’m not in favor of the MRT/LRT price hike because more people will crowd the buses that I frequently ride hehe.

    Seriously though, I think it’s about time to increase the fare price. It’s been several years that it has stayed at that price level and we all know how everything skyrockets nowadays. I just wish more improvements should be made to compensate for the price increase.