Aquino puts toll VAT on hold


Posted at Aug 16 2010 05:33 PM | Updated as of Aug 17 2010 09:04 AM

MANILA, Philippines - President Benigno Aquino III has put on hold the implementation of the value-added tax (VAT) on the use of tollways, a plan that drew criticisms from various groups.

"Yung VAT actually, I have put it on hold as of last week, this is still subject to a lot of discussion," Aquino told reporters on Monday.

At the moment, Aquino said their main concern is how to mitigate the effect of the planned 250% hike in rates at the South Luzon Expressway.

"Ang first priority kasi natin is SLEx, yung impending 250% toll increase, and initial solutions we have sought to employ to address that increase is not panning out," he said.

The President and Finance Secretary Cesar Purisima will meet to discuss the issues at hand.

"I understand the President is authorized to suspend imposition of certain taxes if so needed. There is a study ongoing on the implications as far as SLEx is concerned, yung increase sa toll rate, yung increase sa transportation, syempre yung VAT is another cost that might deter economic activity. So these will be discussed. So ano yung Plan B? I'm hoping to finish it with Sec. Purisima today or tomorrow," Aquino said.

Last week, the Supreme Court issued separate temporary restraining orders on the imposition of VAT on toll as well as the 250% hike in SLEx rates, saying it would be difficult to "reimburse motorists" should the court decide against these in the future.

The SC issued the TROs based on the petition of former Nueva Ecija Rep. Renato Diaz and former Trade and Industry official Aurora Ma. Timbol, and an omnibus motion filed by lawyer Ernesto Francisco.

Diaz and Timbol questioned the imposition of the VAT, arguing that it is “unconstitutional” and an "invasion of legislative powers." They also said that toll is considered user's tax, and should therefore no longer be taxed.

Meanwhile, Francisco raised conflict of interest concerns over the hefty hike in toll rates at SLEx. He said a copy of the SLEx supplemental toll operation agreement showed that Mark Dumol, a former chief of staff of then Public Works and Highways Secretary Gregorio Vigilar, was the signatory of the Malaysian investors in the SLEx rehabilitation project.

The Bureau of Internal Revenue (BIR) was supposed to implement the VAT on toll this Monday, August 16.

The BIR estimated to collect P1 billion a month in additional revenues from the measure, which, it said, should have been implemented back in 2005, when the Expanded VAT Law was enacted.

Sen. Ralph Recto, one of the authors of the controversial E-VAT Law, however, said the law never imposed VAT on toll.