BIR wants tax on toll by August

MANILA, Philippines - Motorists will have to bear another burden with the increase of tollway fees starting next month.

The Bureau of Internal Revenue (BIR) yesterday announced it would implement the value added tax (VAT) on tollway operators by next month.

The BIR made the announcement shortly after the Supreme Court (SC) ruled the government could impose VAT on tollway operators.

The high court ruled that tollway operators are not exempt from imposition of taxes.

And this means an almost 300-percent increase in tollway fees, according to Albay Gov. Joey Salceda, one of those who opposed the tax implementation.

BIR Commissioner Kim Henares welcomed the decision. She said the revenue agency would implement the new tax measure “as early as August.”

Henares said the BIR expects to generate roughly up to P2 billion annually in additional revenue from the VAT on toll.

The BIR has been arguing that the VAT on toll is not a new tax and should be slapped in accordance with the VAT law. Under the amendments to the VAT law in 2005, franchise receipts of holders such as toll operators are subject to VAT.

The law should have been implemented as early as 2005, Henares pointed out, but has been deferred because of administrative setbacks and stiff opposition from toll operators.

Henares said the BIR, under her leadership, would strictly implement all tax laws as part of efforts to boost state coffers.

As of last count, BIR estimates that toll operators owe the government a total of P6.5 billion in unpaid VAT on toll from 2007 to 2009.

Then BIR commissioner Joel Tan-Torres had planned to implement the controversial VAT on toll in April last year but this was deferred after the Toll Regulatory Board and tollway operators sought for more time to prepare for the measure.

In a unanimous decision, the SC said the imposition of VAT by the BIR is not a usurpation of legislative power or expansion the coverage of VAT law.

The SC said there is no law exempting toll fees in the North and South Luzon expressways and other major superhighways from the 12-percent VAT.

The high court dismissed the petitions of former Nueva Ecija congressman Renato Diaz and former trade assistant secretary Aurora Ma. Timbol, alleging the legislative intent to exempt tollway operations from VAT.

“If the legislative intent was to exempt tollway operations from VAT… then it would have been well for the law to clearly say so,” the high court said.

“Tax exemptions must be justified by clear

statutory grant and based on language in the law too plain to be mistaken. But as the law is written, no such exemption obtains for tollway operators. The Court is thus duty-bound to simply apply the law as it is found,” stated the ruling penned by Associate Justice Roberto Abad.

The SC also upheld the power and authority of the executive branch to impose VAT on franchise grantees like tollway operators.

The high court dismissed the arguments of the petitioners that the imposition of VAT on toll fees is unconstitutional and can be considered as an “invasion of legislative powers.”

“The VAT on franchise grantees has been in the statute books since 1994 when RA 7716 or the Expanded Value Added Tax law was passed. It is only now, however, that the executive has earnestly pursued the VAT imposition against tollway operators,” the court said.

Petitioners argued toll rates are not included in the sale or exchange of services under Republic Act 8424 (Comprehensive Tax Reform Act of

1997) and also not covered by RA 7716 (Expanded VAT Law).

But the SC said, “The executive exercises exclusive discretion in matters pertaining to the implementation and execution of tax laws.

Consequently, the executive is more properly suited to deal with the immediate and practical consequences of the VAT imposition.”

With the ruling, the high court also lifted the temporary restraining order it issued against the imposition of VAT on toll rates on Aug. 13 last year.

Lessen the burden

SC spokesman Jose Midas Marquez explained the TRO was issued last year so as to prevent irreparable damage to motorists on the possibility that the high court would later declare the increases in toll fees illegal.

“What was considered then was urgency of the matter. The Court believed that if it would not issue a TRO, it would be very difficult to refund motorists the additional fees collected if the Court later on decided against the VAT on the toll fees,” Marquez said.

Salceda, who once served as economic adviser in the Arroyo administration, said, “After the 278 percent increase in toll fees sanctioned by the Supreme Court, this (ruling) represents another imposition on Bicol viajeros (travelers) and constitute a net resource on our limited economic base,” said

Salceda explained the imposition of VAT on the Southern Luzon Expressway, as an example, would add burden to a motorist driving a car from Alabang to Calamba from P77 to P86.24, with P9.24 VAT.

Passenger buses on the same route would have to pay P173.60 from P155, with P18.60 VAT.

Cargo trucks and trailers would have to pay P259.84 from P232, with the imposition of P27.84 VAT, according to Salceda.

“There should be a government agency whose only function is to fight for the rights and welfare of the consumer,” Salceda said.

Lawmakers also called on Malacañang and the Toll Regulatory Board (TRB) to find ways to lessen the burden of the looming increase of toll fees to motorists.

Quezon Rep. Danilo Suarez said the SC decision could be “good” for the BIR but not for the motorists and the riding public.

“This (ruling) surely is going to be an additional burden to consumers,” Suarez said.

“I feel sorry for the consumers and users because the tax will surely be passed on, I hope the TRB can find a creative way to lessen the burden, whether it’s through subsidies or some other scheme,” Aurora Rep. Juan Edgardo Angara added.

Zambales Rep. Milagros Magsaysay suggested to the government to give discounted VAT rates “to ease the burden to the people now that everyone is reeling from high oil prices.”

Eastern Samar Rep. Ben Evardone said the government should now review the terms of build-operate-transfer (BOT) contracts with tollway operators in view of extending the recovery period of the proponents to lessen the toll rates.

“The TRB can impose a moratorium in toll rate hikes or it can peg the increases to inflation rates,” Evardone said. – With Edu Punay, Paolo Romero