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THE
proposal to “enforce” the value-added tax (VAT) on the
toll ways as a means of raising revenue for a
cash-strapped government has triggered a complicated
debate among officials— with legislators, the Executive,
and toll operators advancing contradictory views about
it.
Press
Secretary Ignacio Bunye said Tuesday President Arroyo is
firm in her decision not to impose any new taxes this
year, and will rely on existing tax measures and
enhanced revenue collections through privatization and
the rationalization of fiscal incentives to meet the
government’s deficit targets.
The crux
of the debate lies in the phrase “existing tax
measures,” with the Finance department earlier reported
as seeking the legal basis for starting to enforce
collection of the VAT on toll ways, and officials saying
this was in the spirit but not necessarily in the letter
of the law.
The
reformed VAT’s chief author, Sen. Ralph Recto, said
Monday, however, that even the original VAT law had
allowed imposition of the tax on toll services, and he
sounded aghast that the Finance department through the
revenue agencies had not collected the tax.
Finance
officials estimated that the state could get at least P1
billion a year in VAT collections from the toll
operators if they start collecting it.
The
spokesman of the prime toll operator, the Philippine
National Construction Corp. (PNCC), made it clear in
radio interviews on Monday that the toll charges
collected through the years had always been “VAT-free,”
and thus, the operators cannot be held liable for
remitting VAT revenue to the government.
Any
decision henceforth to add VAT to toll charges will thus
be passed on to consumers, and hence, partakes of an
increase in toll fees which the Toll Regulatory Board (TRB)
must first approve, lawyer Madel Palogan Tacardon told
dwIZ’s Karambola hosts..
The
Palace, however, reiterated the President’s intent not
to pass on new burdens to the people. Bunye said: “This
[new impositions] is not in the contemplation of the
President’s announcement. The President very clearly
said that the tax-reform measures that we have passed
would suffice for the time being to meet the deficit
targets. And we are confident that we will meet the
deficit targets with a combination of tax measures.”
He said
such tax measures are those that have been legislated,
plus “enhancement measures” or the acceleration of the
government’s privatization program, and the
rationalization of fiscal incentives which the
administration will continue to push for in the new
Congress.
“There
are some energy companies that are up for sale and this
may be consummated within the year,” said Bunye. He
cited Masinloc, “as its privatization is at an advanced
stage.”
With
privatization and enhanced collection of present taxes,
“we should be able to meet our targets,” he added.
Asked
about the proposed VAT on toll ways, he said, though: “I
cannot speak for the toll ways. I can only reiterate
what the President has said. The President is very
clear: I believe when she says no taxes, she says no new
legislated taxes. The President said no new taxes, so I
guess that’s it.”
He added
that when the President made the announcement regarding
her position on new taxes, she was with members of the
economic team such as Finance Secretary Margarito Teves,
Trade Secretary Peter Favila and Socioeconomic Planning
Secretary Romulo Neri.
This
just proves, he said, that “there was agreement that
there is no need for new taxes.”
Reports
of a planned 12-percent VAT on toll ways were spurred by
the DOF’s move to seek legal basis for the measure to
strengthen revenue collections.
Finance
Undersecretary Gil Beltran had said that a toll ways VAT
would ensure P1 billion more in revenues every year.
The
presidential guidelines of “no new tax legislation”
could spark allegations of doubletalk, however, if the
DOF insists on collecting the toll ways VAT and the toll
agencies insist on passing it on to users.
The
cash-strapped government should not pass the burden anew
on end-users by raising toll rates at the North and
South Luzon Expressways; instead, it must collect back
taxes from toll operators for nonpayment of the
12-percent VAT since the law was passed, outgoing Sen.
Ralph Recto recommended Monday.
The
operators are expected to contest State efforts to get
backpayments, claiming they never collected VAT in the
first place.
In an
interview, Recto reminded Finance officials that there
was no need to look for a legal basis to impose the VAT
on toll operators as they were “never exempted” from
paying the VAT even under the original version of the
tax law passed in 1997.
“Even
before the expanded-reformed VAT, toll ways were never
exempted from the VAT,” the senator, who chaired the
ways and means committee that endorsed the amended tax
law, said.
Recto
recalled that during the Senate and House deliberations
on the VAT amendments, there was never any discussion to
exempt toll ways, which means that the current toll fees
charged to motorists using toll roads already includes
the 12-percent VAT.
Recto
explained that this is because “the liability to pay the
VAT is with the person selling the goods or services.”
The
senator told BusinessMirror: “My position is that the
toll rates you pay today are already VAT-inclusive [so]
they cannot use the RVAT law as an excuse to raise toll
fees. They cannot say they will now increase the present
toll fees because the DOF will implement the R-VAT
because they were never exempted to begin with.”
At the
same time, Recto chided DOF officials, saying “they do
not know what they are talking about.” He was referring
to reports that tax policy planners were ruing the fact
that P1 billion in additional revenue would have been
collected had toll operators been required to pay the
VAT. |
