Aquino allies question 12% VAT on toll rates

The 12-percent value-added tax (VAT) the government will impose on tollway charges starting next week is illegal as it is not covered by the amended VAT law, an author of the law and an ally of the administration said Wednesday. Sen. Ralph Recto, a party-mate of President Benigno Aquino III in the Liberal Party (LP), said Republic Act 9337 (amended Expanded Value Added Tax law), which he authored, excludes land-based transportation contrary to what the Bureau of Internal Revenue (BIR) claims. “Walang (There's no) VAT when you ride a taxi, or when you ride a bus or a tricycle. All land-based (vehicles) are non-VATable because of the impracticality of it," he said. The BIR announced last month that it will impose a 12-percent VAT on toll of all expressways in the country starting August 16. Another LP member, Sen. Franklin Drilon, called on Finance Secretary Cesar Purisima to defer the planned toll hike. “Kami po ay nananawagan kay Secretary Purisima kung pwede ipagpaliban pa itong imposition ng VAT para mapag-aralan kung ito’y may basehan sa ating batas," he said. (We are appealing to Secretary Purisima to defer the imposition of the 12-percent VAT so that we can look if it has legal basis.) Recto particularly cited Section 6 of the law which states that only “common carriers by air and sea relative to their transport of passengers, goods or cargoes from one place in the Philippines to another" are covered by the 12-percent VAT. Recto criticized government officials who use the amended VAT law to justify the new tax despite Aquino’s promise during the campaign period in the May 10 elections that he will not impose new taxes on consumers. “It is double-speak on the part of some of the officials of government when they say that this is not a new tax, when it would be enforced for the first time. It is a new tax. Sino ang niloloko natin (Who are they kidding)?" he said. Recto, chairman of the Senate committee on ways and means, will spearhead a hearing on Thursday regarding the planned toll hike to solicit opinion from agencies that will be affected by the increase. BIR Commissioner Kim Jacinto-Henares said that the imposition of the VAT on toll fees is legitimate since it is stated in the amended VAT law. “Ang ini-imposan po ng VAT, hindi po 'yung pamasahe, (kundi) 'yung binabayad ng jeep at bus sa paggamit ng kalsada. Magkaibang transakyon yung dalawa (VAT will not be imposed on the fare but on the fee for using the expressway. That's two different transactions)," she said.- KBK, GMANews.TV