SC asked to stop Aug. 16 toll hikes

A petition has been filed at the Supreme Court asking it to prevent the government from imposing a 12-percent value added tax (VAT) on tolls, which is part of the Aquino administration’s campaign to improve revenues, starting next week. In their petition, former Nueva Ecija Rep. Renato Diaz and former Trade assistant secretary Aurora Timbol said such imposition is illegal since tolls on roads and highways are excluded in the coverage of sale of services subject to VAT. The two said they had also opposed a similar proposal during the Arroyo administration due to lack of legal basis. The imposition of the 12-percent VAT on tolls is scheduled to start on Monday, August 16. Diaz is the principal author in the House of Representatives of Republic Act No. 8424, or the “Comprehensive Tax Reform Act of 1997," and one of the co-authors and sponsors of Republic Act No. 7716, known as the “Expanded VAT Law." Timbol, who served during Ramos administration, is one of the principal writers and initiators of the Consumer Code of the Philippines and a former consultant in the Toll Operating Agreements and Supplemental Toll Operating Agreements between the government and its partners in the private sectors.

Status quo In their petition, the two said the SC should prevent the Bureau of Internal Revenue (BIR) and Toll Regulatory Board (TRB) from imposing the 12-percent VAT on tolls without legislative approval by issuing a status quo order. Diaz said based on RA 8424 and RA 7716, tolls on roads and highways are not subject to VAT. He said if the government pushes through with it, it will be committing an unconstitutional act that can be considered as an “invasion" of legislative powers of Congress. The petitioners also said the SC had ruled in a 2006 case of Manila International Airport Authority vs. Court of Tax Appeals that toll is a user’s tax, which they said means the imposition of VAT on a user’s tax is in effect “imposing a tax on a tax, and not a tax of on sale of services." “There can be no VAT if there is no sale of services. The construction of roads and highways is primarily the role of the State. Thus, to impose VAT on a user’s tax is tantamount to a tax on public services. This is certainly violative of the provisions of the Constitution that taxes must be equitable," they said. Motorists to suffer Diaz and Timbol also said that adding another 12-percent tax on tolls will be an added burden to the motorists and consumers who will bear the brunt of the additional tax. The increase in tolls is expected to result in increase in the prices of basic commodities. Timbol said that based on her studies, agreements between the government and its private partners on toll projects require the computation of the toll fees that may be collected by operators, “and VAT has never been included in any of these computations." She added that the government may also be sending a wrong signal to investors that will damage the reputation of the present administration because of the unpredictability in its policies. “Whatever additional revenues the BIR may collect as VAT on toll fees may only be used to compensate the private investors for the violation of the contracts between them and Government," she said. - KBK, GMANews.TV