THE Supreme Court (SC) has given the Bureau of Internal Revenue (BIR) the go-signal to impose a 12-percent value-added tax (VAT) on tollway charges nationwide, which is scheduled to start on Saturday.
Internal Revenue Commissioner Kim Henares clarified that the VAT is included in the new toll and motorists should not pay an additional amount on top of it.
Many toll operators have started to adjust upward their fare matrix, which will be implemented on Saturday.
Henares emphasized that the BIR should not be blamed or be used by toll operators as an excuse to increase their fees.
“If additional charges will be imposed by toll operators without the proper approval of the Toll Regulatory Board, then they should be held liable. And if it is a common carrier that jacks up its fees and puts the blame on us [the BIR] then the Land Transportation Franchising and Regulatory Board shall sanction them,” she said.
In a statement released on Thursday, SC Administrator and Spokesman Jose Midas Marquez said there was no legal obstacle to the imposition of 12-percent VAT on toll after the Court had denied the petition of former Nueva Ecija Rep. Renato Diaz and former Trade Assistant Secretary Aurora Maria Timbol seeking to declare the toll VAT as unconstitutional.
Marquez noted that in its July 19 ruling, the Court lifted the temporary restraining order it issued on August 13, 2010, against the imposition of VAT on toll.
“With the lifting of the TRO, the VAT on toll can now be imposed, notwithstanding the pendency of a motion for reconsideration,” Marquez said.
The Court’s July 19 decision, however, has yet to attain finality because a motion for reconsideration is still pending before it.
Henares warned businesses not to use the imposition of the VAT on toll to increase fares or prices of other goods.
According to the agency’s computation, Henares said the impact of VAT on toll per kilometer is only 1.6 centavos per passenger, per bus. For goods being transported through expressways that exact toll, the increase in the prices should not be higher than 12 percent—or the same rate of VAT being imposed on toll fees.
“Therefore, if it has impact, it should only be very minimal. If the increase in the prices of goods will be higher than 12 percent, it is already profiteering,” Henares said.
For private motorists, Henares said the effect will be higher but only if a car only contains one passenger or just the driver of the vehicle.
The BIR expects to collect from P2.3 billion to P3 billion in revenues from the VAT on toll every year, according to its estimates.
Recently, Diaz and Timbol asked the Court to reinstate the TRO it previously issued stopping the imposition of tax on toll.
Diaz reiterated that as a principal author of RA 8424, or the “Comprehensive Tax Reform Act of 1997, and co-author of RA 7716, or the Expanded VAT Law, he has openly stated not only to the Department of Finance and the BIR but also in the media that toll is not included in the coverage or sale of services subject to VAT.
Furthermore, the former legislator stressed that the Court, in the case of Manila International Airport Authority vs. Court of Tax Appeals, City of Parañaque, et. al, has ruled that toll is called “user’s tax.” Diaz said the imposition of a VAT on a user’s tax is in effect imposing a tax on a tax, and not a tax on “sale of services.”
In their memorandum, Diaz and Timbol asked the Court to grant its motion for reconsideration and set aside its July 19 decision.
They also asked the Court to declare that toll is classified as a user’s tax.
Or, in the alternative, the petitioners said the issue of the imposition of VAT on toll be endorsed to the legislative department for final assessment on its inclusion or exclusion under the VAT law given the pending legislation in Congress.
They also sought the conduct of an oral argument on the issue and that an amicus curiae (friend of the Court) be invited to clarify issues prior to the resolution of their motion for reconsideration.
