Higher road tolls with EVAT soon?

Operators of the South Luzon Expressway (SLEX) and Skyway System will impose a 10-percent value-added tax on the toll they charge motorists using this route if the Supreme Court issues its final ruling upholding the constitutionality of the expanded value-added tax (EVAT) law.

Though the Philippine National Construction Corp. and the PNCC Skyway Corp. (PSC) have pending protests against imposing VAT on tolls, "the public may think we have increased toll rates. No, we are just implementing an order from the Bureau of Internal Revenue (BIR) with regards to EVAT implementation," PNCC corporate communications chief Charito Chavez said in a statement yesterday.

She added that as soon as their collection system is reformatted to include the VAT, additional charges because of the EVAT would be imposed on vehicles passing through the SLEX and the Skyway.

The tollway operators argued that the PNCC franchise provides that other than taxes on income and real property, no other tax or fee shall be levied on PNCC and its franchise assignee. As such, VAT imposition would constitute an impairment of contract and be considered unconstitutional, they said.

"We filed an appeal for reconsideration with the BIR and we are still awaiting their response. If they will grant our request, then the EVAT will not be added to existing toll fees and the motorists will be freed from additional burden," Chavez said.

She cited BIR VAT Ruling No. 078-99 dated Aug. 9, 1999, which emphasized that the tax-exempt status of the PNCC and its franchise assignee is covered by the "non-impairment clause of the Constitution."

In collecting the 10-percent VAT on tolls, the PNCC said there would be cases wherein the sum of the toll and the VAT would result in "totals with centavos."

"As authorized by the Toll Regulatory Board, the VAT-inclusive tolls with centavos will be rounded (off) to facilitate payment and avoid chaos at toll plazas," Chavez said.

PNCC and PSC officials hope any incremental revenue from rounding off VAT-inclusive tolls would be sufficient to cover costs they have to bear in imposing a 10-percent VAT and two-percent minimum corporate income tax, which they said "were not considered when their toll rates were structured." "If there are oppositions, these should be forwarded to the BIR. We are just following orders from the BIR," Chavez said.