Palace: All systems go for VAT on toll


Posted at Aug 12 2010 04:44 PM | Updated as of Aug 13 2010 08:32 AM

MANILA, Philippines - Barring any court intervention, it is all systems go for the implementation of the value-added tax (VAT) on the use of expressways starting next week, Malacañang said, following a Senate hearing on the controversial tax measure on Thursday.

“It would appear that the VAT on the toll would still be a go, unless otherwise directed,” Presidential spokesperson Edwin Lacierda said, noting that the Supreme Court has not issued a temporary restraining order.

Lacierda's statement came after senators, in a hearing on Thursday, grilled Bureau of Internal Revenue (BIR) chief Kim Henares over the agency's plan to impose the 12% VAT on toll beginning 10 p.m. Monday.

Lacierda maintained that Malacañang remains firm on its stand to tax tollway operations, a move he said should have been done in 2005, when the Expanded VAT Law was enacted.

The presidential spokesman insisted that the VAT is necessary to raise additional funds for vital government social services.

"Itong VAT na ito, bagama't ay masasabi nating makakasakit sa mga motorista, ito pong makokolekta po natin ay magagamit po natin sa mga programang pangkalahatan po. So, that is the purpose why we are collecting all these taxes, for a greater good,” Lacierda said.

Senate ways and means committee chair Ralph Recto said that the E-VAT, the law he authored and now being cited by the BIR to justify its plan, never imposed VAT on tollways.

"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," explained Recto.

Senate President Juan Ponce Enrile, for his part, said the BIR should review its proposal to tax tollway operations as this has no legal basis.

On Wednesday, former Nueva Ecija 1st Distric Rep. Renato Diaz and former Trade and Industry assistant secretary Aurora Timbol filed a petition before the Supreme Court to stop the imposition of the VAT on toll.

Citing the case of Manila International Airport Authority vs. Court of Tax Appeals, City of Para?aque et al, the petitioners said the court had ruled that toll fees are "user’s tax.”

Therefore, the imposition of VAT on a user’s tax is, in effect, imposing a tax on a tax, and not a tax on sale of services, they added.

Consumer and transport groups have vowed to block the new tax measure, which, they warned, could jack up fares and prices of goods.

New toll rates

Based on the new rates released by the Toll Regulatory Board, taking into account the 12% VAT on the use of tollways, fees at North Luzon Expressway will increase to P195 (Valenzuela to Sta. Ines) from P174 for Class 1 (car and jeepneys); P487 from P435 for Class 2 (bus and trucks); and, P585 from P522 for Class 3 (trailers and large trucks).

At the Manila-Cavite Expressway, fees will jump to P25 from P22 for Class 1; P48 from P43 for Class 2; and P78 from P65 for Class 3.

At the Subic Clark-Tarlac Expressway, the rates will go up to P203 from P181 for class 1; P407 from P363 for Class 2; and P609 from P544 for Class 3.

Motorists plying the South Luzon Expressway, meanwhile, will have to pay significantly higher toll fees because the VAT will be implemented alongside a 250% hike in rates. Class 1 vehicles will be charged P85 compared to the original P22, while toll for Class 2 will increase to P170 from P43.

The operator of SLEx is hiking fees to recover the costs of rehabilitating the 27.3-kilometer Alabang to Calamba stretch, and expanding the 1.2-km Alabang viaduct.