Transport network company Grab has announced its plan to seek a fare hike of around six to 10 percent, or P10 to P13, citing the anticipated higher operating expenses amid the impending increase in fuel excise tax brought about by the government’s new tax reform package.
Under the Tax Reform for Acceleration and Inclusion (TRAIN) law, which took effect on January 1, the government would impose higher excise tax rates on vehicles and petroleum products.
“We will file a petition with the LTFRB (Land Transportation Franchising and Regulatory Board (LTFRB) to request for a fare change,” Grab Philippines head Brian Cu said in a press conference.
“Now, we are still computing the exact impact of that fare change, but we are looking at a fare increase of anywhere between 6% to 10% of current fares,” he said, adding that the rates would mean a P10 to P13 increase in the fare.
Cu explained that a Grab driver consumes an average of P800 to P1,000 worth of fuel a day, among other daily expenses to operate as a Transport Network Vehicle Service (TNVS) partner.
“When we compute the average income of the driver of what he needs to make to make a sustainable to 3,200 to 3,600 in fares. Of that amount, P900 to P1,100 for fuel. That’s 20 to 22 liters,” Cu said.
When the higher excise tax rates are applied, Cu said there would be an increase of around five percent, in addition to maintenance and vehicle spare parts of two percent to three percent in the Grab driver’s operating expenses.
“Because of excise tax on petroleum products, this would definitely impact their daily expenses, which would then impact their monthly earnings,” Cu said.
“Our biggest worry is the day to day operations with regards to the fuel they (drivers) need. If a fare adjustment is not made, this would put into question their income on a monthly basis,” he said.
In case the LTFRB finds merit in their petition and approves it, Cu said the fare hike would only be effective should they observe a “significant change” in fuel prices.
“Hindi pa naman nagaakyat ang mga gas stations ng fuel prices. The increase should not apply to old stock, according to the government,” Cu said.
“We will not increase it until we see a significant change in pump prices,” he said. /kga