The Philippine Chamber of Cooperatives Inc. (Co-op Chamber) said modern vehicles purchased by transportation cooperatives to comply with the Public Utility Vehicle Modernization Program (PUVMP) should be exempted from the 12 percent value-added tax (VAT).
Co-op Chamber Executive Director Edwin A. Bustillos told the BusinessMirror that scrapping the 12 percent VAT slapped on vehicles purchased by transport cooperatives, which consist mostly of jeepney operators and drivers, will ease their financial burden.
Bustillos cited Section 70 (Tax and Other Exemptions) of Senate Bill 2811 or the Revised Cooperative Code of the Philippines which aims to remove the 12-percent VAT on modern vehicles purchased under the PUVMP.
“Sa ganitong paraan, mababawasan din ng 12 percent ang ilalabas na pondo ng mga kooperatiba sa pagbili ng modernized jeeps. [In this way, cooperatives will not have to reduce their fund by 12 percent in buying modernized jeeps],” Bustillos said.
The group also urged the government to expand the coverage of the Comprehensive Automotive Resurgence Strategy (CARS) program to include the PUVMP.
Bustillos said the CARS program will provide incentives to local manufacturers to do their assembly here in the Philippines which will eventually cut the prices of modernized jeepneys.
Under the CARS program, participants have to produce at least 200,000 units of their enrolled vehicle within six years to be eligible for fiscal support amounting to P9 billion.
Despite calls to stop the PUVMP and the suspension of government financing, cooperatives said they are prepared for its full rollout.
Senators have signed a petition to halt the PUVMP while the Development Bank of the Philippines (DBP) ceased lending to transport cooperatives in Metro Manila and areas without approved route plans.
Oro Transport Service Cooperative Manager Samuel Abello told reporters that the PUVMP remains a “viable” project as there are other financers aside from state-run banks.
“There should be political will. If there’s a plan already, it should be implemented,” Abello said.
Co-op Chamber said the PUVMP has been in the works for some time, gaining momentum in 2017 and continued by the Marcos administration.
“The co-ops have already invested huge amounts of money on monthly amortization to financial institutions such as Landbank and DBP; therefore, suspending the program will only create more financial problems for the cooperatives,” it said.
Citing data from the Department of Transportation (DOTr) and Land Transportation Franchising and Regulatory Board (LTFRB), 83.3 percent of the nationwide Industry Franchise Consolidation has been completed.
“Suspending the program would only bring hardship to individual operators and drivers who have found success by forming these cooperatives,” it added.
The group suggested institutionalizing the PUVMP through legislation as well as for the government to provide subsidies and tax incentives.
It urged the government to finalize the Local Public Transport Route Plan, which is expected to the completed in 2026. The plan outlines the route network, mode and required number of PUVs per mode.
Local government units are also encouraged to provide free common terminals to pick up and drop off passengers without additional costs.
