First of three parts - Oct 11, 2016
Despite all the ongoing programs to alleviate traffic, decongestion is still a pipe dream. By now, the measures being considered are getting more drastic as the weeks pile on. You can infer the desperation of our authorities when you realize the extent the government is ready to curtail our motoring freedom of circulation. Besides the time torture and vehicle density, private motorists face more woes like lane restrictions, turn restrictions, wholesale access restrictions (like the EDSA bollard blockade that prevents motorists coming from Ortigas Avenue to access the Ortigas Center via EDSA Annapolis and Connecticut), plate number restrictions (UVRRP, or the Unified Vehicle Volume Reduction Program, aka coding), and so on.
Some ideas, tired and old, have met an icy reception from the public and resulted in doubtful success. The mandatory opening of private roads of gated communities to public access is again being mulled, notwithstanding that the road layout of most, if not all well-planned communities, are limited access and built to service only the self-contained communities exclusively, hence through or pass-through traffic is usually impractical.
Looking for inspiration from various countries and cities, our authorities would be remiss if they didn’t even study other vehicle reduction schemes. As always, the benchmark happens to be the most successful -- Singapore. There, licenses to purchase motor vehicles are by quota and the price depends on competitive auction. Parking spaces are also limited and auctioned. Then there are the controlled access to the road itself; the ubiquitous Electronic Road Pricing (ERP) gantries. Mounted fore and aft of an over-the-road gantry, ERP vehicle ID readers record the front and rear license plate of a car driving into the ERP zone. Then the reader sends the plate number to headquarters, which then determines how much congestion charge to deduct from the particular passing vehicle’s pre-paid in-car electronic tag, depending on the time of the day.
It’s one of the most sophisticated in the world as pricing is based on real-time supply and demand of road use. If point-to-point speeds fall below a certain benchmarked distance, like during peak hour, the ERP charge goes up. It’s a theoretical economist’s wet dream come true as the user is charged by his/her marginal utility; i.e. as per the current cost of using road space. Not content with this, Singapore is pushing the envelope and is already designing GPS-monitored tags that can operate with other electronic road monitors and toll collections, doing away with the need for those giant gantries. But ERP is only one branch of a whole integrated transport network where the alternative to private motoring is one of the world’s safest, most comfortable and extensive mass transit networks.
Another recent practitioner of pseudo-ERP is a newcomer to the game -- London. Begun in 2003, it looks quaintly Edwardian, or even Victorian, compared to Singapore’s homegrown, high-tech solution, which began in the mid-1990s. London currently charges a flat rate congestion charge of GBP11.50 per entry into the 7.5-square-kilometer restricted zone of the city. Residents are given a discount, which nets the charge to GBP1.50. Monitoring is by police CCTV cameras. Upon entering the “charge zone,” marked on the tarmac by a giant red circle with a white “C” in the middle, license plates are recorded, and if the day’s congestion charge has not been paid by midnight, a penalty charge will be mailed to the vehicle owner.
Though already proposed during the Marcos years, vehicle-reduction programs, like odd-even, were always successfully opposed by the Philippine Motor Association, today’s Automobile Association Philippines, on the grounds of unreasonable restrictions on the right to drive. But the construction of the MRT-3 in the mid-1990s made the odd-even ban a necessity. Instead of the European practice where odd-number plate numbers are banned on odd-number calendar days and even-numbered plate numbers are banned on even-numbered days, the MMDA chose regular days of the week; Monday, Wednesday, Friday for odd-numbered plates, Tuesday, Thursday, Saturday for even-numbered plates. High-occupancy vehicles, distinguished by having two or more passengers, excluding driver, were exempted from the ban. Faster travel times were indeed recorded during rush hour when this was in place 20 years ago. At that time, the motoring public believed the government promise that once the MRT-3 was finished, regular travel on EDSA will be restored and buses will be banned because the MRT-3 was supposed to supplant them. But this turned out to be a politico’s empty promise.
Still, the odd-even ban made life difficult for single-vehicle families and so the variant called UVRRP was instituted. Instead of a theoretical 50% ban, it was modified to a 20% ban, essentially prohibiting plate numbers that end with 1 and 2 on Mondays, 3 and 4 on Tuesdays, and so on. The motoring public reacted by buying more cars and specifying plate numbers on new-car purchases so that they don’t lose mobility for the whole week. A rather expensive solution, but it did create an unrelenting sales boom for car dealers because the discordant mass transit system left the motoring public with no choice.
Second of three parts - Oct 18, 2016
At present, legislators and technocrats are studying further options which are generally derivatives of the two-pronged approach of Singapore; (1.) Limiting vehicle ownership by quotas for purchases and parking space, and (2.) Congestion or CBD access charge, where prices depend on the flow of traffic.
In the meantime, there are pending bills in Congress that are proposing a “no-garage, no-car-purchase” law, or even a “no-income tax return, no-car purchase” law. But these harebrained measures damage the economy by restricting trade of the automotive industry, a pillar of the economy, a huge taxpayer, a giant employer and an industry that the government wants to promote and grow. A variant of these laws is the proposal to tax the second or third vehicle that a family buys. The problem lies in that these proposed laws assume that the rest of the country is as congested as Metro Manila, or that income earners like pensioners, contractors and professionals (other than those regularly employed) do not have a right to purchase a car. This is downright discriminatory and ridiculous.
Let us tackle the second-vehicle tax first. The proposal assumes that by taxing the extra vehicles bought to get around the coding or odd-even schemes will reduce congestion. We believe that while vehicle reduction by this tax will not be significant, the law will be prone to discretion and loopholes. This will then need extra effort to police which, in turn, goes against efficient tax administration. Moreover, as a one-size-fits-all, broad-brush solution, it will do more harm than good; i.e. hurt the auto industry by punishing vehicle purchases in other cities where congestion is not as severe as Metro Manila’s.
On the other hand, we are aware that the DoF needs compensatory revenue after it reduces income taxes. BIR is looking at taxing luxury cars ad valorem (i.e. a tax as percentage of sale price). We think taxing cars and congestion reduction are not a correlated relationship particularly for countries as area-large as ours.
Proof of this is another economy that has the same size and population as Singapore, the same excellent mass transit system, the same predictable traffic flow, but without Singapore’s interventionist restrictions on car ownership, taxes and congestion discrimination -- Hong Kong. There, auto taxes are high for fiscal and environmental reasons and not for congestion reduction purposes. So assuming that increasing revenue is the purpose of the second-vehicle tax, we propose a flat tax per category per price segment.
For example, cars selling for P1.0 million should be exempt from the tax because this is the price point of multi-passenger transport for the regular Filipino starter family. The next price segment, P2.0-3.0 million will now be charged a flat tax of P50,000 as this is the price range of fancier SUVs and D-segment cars. The next price segment, P3.0-4.0 million will entail a flat tax of another P50,000. Hence, a P22.0-million Aston Martin Rapide will be taxed at P1.0 million and a P35.0-million Rolls-Royce Phantom will carry a P1.65-million tax. This is on top of all the regular taxes imported cars pay. Not a bad deal for the tycoons, right? To promote alternative energy, hybrids like the Toyota Prius and some Porsche and Lexus models, can be exempt.
This P50,000 tax should be suspended once the exchange rate shoots up beyond P50 to $1. Imagine if a Mitsubishi Mirage that today costs P600,000 suddenly costs P4.0 million because of an exchange rate depreciation, the P100,000 tax in this case would kill auto industry sales. Of course, the auto industry and other affected stakeholders should join in with their reservations or support, since our auto industry already pays a lot of taxes, making our car pricing the most uncompetitive among the car-exporting countries in ASEAN.
As for congestion charging, forgive us if we have lost faith in the odd-even, coding, no-garage, no-purchase and quota to purchase combined schemes as Hong Kong, with its mass transit facilities, proves that it can do without it. Congestion reduction/discrimination was tried at one of the many cross-harbor tunnels some time ago but it met with widespread public opprobrium. In our case, the restraint on personal freedoms is too much for us, Asia’s oldest democratic car culture.
We have proposed this before and it won’t need expensive technology like Singapore’s. We can keep it simple and attractive. We can have as many bids, or BOT-PPPs, or unsolicited proposals for as long as congestion charging for Metro Manila prioritizes ease of application/enforcement, speed of construction, minimal traffic inconvenience, simple maintenance and income for the government. The participants can fulfill President Duterte’s wish that we get the best and not the lowest bidder.
We propose a one-time passage fee of P100 per day, valid from 8 a.m to 10 p.m., while passage outside those hours is free of charge. We can combine it with an odd-even twist; P100 for even-numbered plate numbers on even-numbered calendar days, while the even-numbered plate number can travel on odd-number calendar days but must pay P200. If one wants to stick to coding, then cars, jeeps, taxis, buses, etc. pay P50 a day four days of the week, but P200 on the coding day if they need to travel.
But with this, vehicle reduction would hardly change from today’s pattern.
tfhermoso@gmail.com
source: Businessworld
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