Following the recent mini Budget presentation made by Prime Minister and Minister of Finance Mia Mottley, private public sector vehicle operators (PSVs) have been making known their concerns about the impact of the measures on the sector.
Here is a joint statement issued by the Association of Public Transport Operators and the Alliance Owners of Public Transport on the matter.
We should like to bring to the attention of the public the measures passed in the recent ministerial statement effective July 1, 2018, relating to the operations of public service vehicles (PSVs) and show how they will affect businesses in the sector.
The PSV associations had, in September 2017, presented a case to Government showing how the increasing operating costs over several years, had adversely affected the sector and its ability to provide service to the commuting public, in view of the fact that its income was legislated at a bus fare of $2 since 2012. The increases in operating costs include:
1. The increase in the price of diesel from
$1.77 per litre in 2016 to $2.46 in September.
2. The increase of Value Added Tax from 15% to 17.5%.
3. The imposition of the National Social Responsibility
Levy of two per cent and its subsequent increase to ten
Those impositions severely affected the viability of operators given that the sector was unable to pass on the increased cost to consumers, as other businesses had the ability to do. Since September 2017, the price of diesel has continued to climb and stands at $2.80 per litre at present.
The introduction of the $0.40 per litre fuel tax and the implementation of the new registration fee replacing 50% of the abolished road tax included in the June ministerial statement have further exacerbated operators’ poor financial conditions. The effects are shown below.
A route taxi working six days a week for a year works 312 days (6 x 52).
A route taxi currently pays road tax of $1,500 and a permit fee of $750 annually.
A route taxi uses, on average, 60 litres of diesel a day or 18,720 litres per year (60 x 312).
The removal of the 12 cents per litre NSRL and the imposition of the 40 cents per litre fuel tax results in a net cost increase of 28 cents per litre, the new price as at July 1 being $3.08.
Increase in expenditure for a year for fuel – $5,241.60 (18,720 x .28).
New registration fee (50% of previous road tax) – $750.
Whereas the route taxi previously paid annually $2,250 (road tax $1,500 + permit fee $750), it will now pay an estimated $6,741.60 (fuel tax $5,241.60 + permit fee $750 + registration fee $750).
A minibus working six days a week for a year works 312 days (6 X 52).
A minibus currently pays road tax of $3,000 and a permit fee $625.00 annually.
A minibus uses on average 100 litres of diesel a day or 31,200 litres per year (100 X 312).
Increase in expenditure for a year for fuel – $8,736 (31,200 X .28).
New registration fee (50% of previous road tax) – $1,500.
Budget effect: Whereas the minibus previously paid annually $3,625 (road tax of $3,000 + permit fee of $625), it will now pay an estimated $10,861 (fuel tax $8,736 + permit fee $625 + registration fee $1,500).
Cost increases of the magnitude suffered by the sector over a long period cannot be sustained by the private owners in the public transportation industry at the present income level. While the sector has been struggling to remain viable up to this point, with little success, the new impositions which will come into effect on July 1, will surely drive operators into insolvency if there is not an increase in the legislated bus fare. Our submission of September 21, 2017, to Government suggested an increase to $3, still well below the accepted cost of providing the service. That suggested fare may have to be reviewed in the circumstances imposed by the recent Budget.
We acknowledge that the removal of the National Social Responsibility Levy on inputs will lessen the impact somewhat, but this benefit is difficult to quantify and will certainly not offset the increases in operating costs caused by the new measures.
It is unquestionably wrong for a Government to force private entrepreneurs to subsidize public transportation out of their own pockets and this aspect of our operations needs to be addressed immediately if the sector is to be in a position to continue to offer service to the travelling public come