Supreme Court asked to lift TRO on toll VAT

MANILA, Philippines – The Supreme Court (SC) was asked yesterday to lift its order stopping the government from imposing a value-added tax on toll at the North and South Luzon Expressways and other major highways.

Commenting on the April 11 petition of former lawmaker Renato Diaz and former trade assistant secretary Aurora Ma. Timbol, Solicitor General Jose Anselmo Cadiz said the tax is needed to raise revenues for the government.

“To stop the much needed implementation of a valid tax law is to ignore the legal truism that taxes are the lifeblood of the government,” he said.

“Needless to say, a cold response to VAT on tollways and a ‘tunnel-vision’ approach in its enforcement are the last things a fiscally deficient nation needs.”

Cadiz said the tax on toll is not unconstitutional as alleged by petitioners.

“The contention of petitioners that VAT on toll fees is violative of the Constitution for being discriminatory and inequitable is patently without basis,” he said.

“To justify the nullification of a law, there must be a clear and unequivocal breach of the Constitution, not a doubtful and argumentative application.”

Finance Secretary Cesar Purisima and Internal Revenue Commissioner Kim Henares said a delivery truck and bus passenger passing through NLEX would spend a maximum of P0.0052 per kilo and P1.404 per person.

In SLEX a delivery truck would add P.0023 per kilo, while a bus passenger would spend an additional P.0612, they added.

The officials contested the claim that tolls are not included in the sale or exchange of services under Republic Act 8424, the Comprehensive Tax Reform Act of 1997, and that it is not covered by RA 7716, the Expanded VAT Law.

Purisima and Henares said services on expressways are not exempt from VAT.

Operations of expressways are not among those listed as VAT-exempt under the National Internal Revenue Code, they added.

Franchises, including those pertaining to the operation of expressways like the NLEX and SLEX, are subject to VAT unless subject to franchise tax under the NIRC, Purisima and Henares said.

Earlier, the Bureau of Internal Revenue directed the Toll Regulatory Board to implement the higher toll fees. However, the SC stopped implementation of the tax.