Enrile, Recto oppose VAT on toll

ABS-CBN News

Posted at Aug 12 2010 01:24 PM | Updated as of Aug 13 2010 03:19 AM

BIR chief says toll subject to VAT

MANILA, Philippines - Two senators scored the Bureau of Internal Revenue (BIR) and the Toll Regulatory Board (TRB) for imposing a value-added tax (VAT) on toll fees.

At Thursday's first meeting of the Senate ways and means committee, its chair Senator Ralph Recto, author of the Expanded VAT Law enacted in 2005, said the law being cited by the BIR to justify its plan never imposed a VAT on toll fees.

Recto and Senate President Juan Ponce Enrile said BIR's and TRB's move to impose VAT on toll is illegal and has no basis.

"Never did we say that toll is 'VATable' because it's an essential government service provided, and a government service should not be 'VATable.' That is our contention," said Recto.

BIR Commissioner Kim Henares defended the government's position and said that the VAT law does not make a distinction on who is collecting the tax.

"If the government is not going to charge and this is really the taxpayer's money, then we are not imposing a VAT, but because they are charging a toll, that is why it is being subject to VAT."

Enrile said the BIR should review its proposal to impose VAT on toll fees.

"The BIR better review this. You are going to impair the contract between toll operator and the government by doing this, you are violating the Constitution. Second, you are going to impose illegal exemption on people unwarranted and unsupported by any law."

Recto said the BIR's plan has political implications because President Benigno Aquino III had repeatedly said he was against imposing new taxes.

The BIR hopes to collect P12 billion annually from the collection of VAT on toll fees.

"San n'yo gastusin 'yan para maliwawang sa taong bayan? If you are going to extract P12 billion from them that we think is illegal to begin with, and with so many flaws and with so many impracticalities? If you can convince me and justify it to me, I will echo it to the public as well," Recto told Henares.

Henares said proceeds from VAT collections will fund the programs of government and will be used also to reduce the government's budget deficit.