BIR: Sans TRO from SC, toll hikes to push through Aug. 16

(Updated 3:28 p.m.) The Bureau of Internal Revenue (BIR) on Thursday said it will push through with the imposition of higher toll rates on August 16, including the 12-percent value added tax (VAT) on tolls, unless the Supreme Court stops them from doing so. "As of now, unless there are changes, then there will be VAT on tolls on Monday," BIR Commissioner Kim Jacinto-Henares told reporters after the Senate inquiry on the imposition of VAT on tolls. Henares said that only the Supeme Court (SC) can stop them from imposing the toll hikes. "Let the SC decide," she said. The BIR chief was referring to former Nueva Ecija Rep. Renato Diaz and former Trade assistant secretary Aurora Timbol's petition saying such imposition is illegal since tolls on roads and highways are excluded in the coverage of sale of services subject to VAT.
Senate fails to convince BIR At the hearing, Senate President Juan Ponce Enrile and Senators Ralph Recto and Franklin Drilon said the BIR has no power to impose a VAT on toll because it is an essential government service. "A government service should not be vatable," said Recto, who also sponsored the act amending the internal revenue code. Enrile explained that services rendered by the government, like tollways, should not be considered as a "sale" because government is mandated to offer such services to the public. "That is the duty of the government to do, no one else can do that," he said. Drilon likewise said that when a user pays toll, he or she is already in effect paying a fee for the use of a facility built by government. Enrile said the said fee is just the amount paid by the government to cover the actual cost of the project. Following this explanation, Recto said that imposing a VAT on toll is like "putting a tax on tax." But Henares maintained that any kind of service which requires payment from consumers should be vatable. "I respect what you (senators) said about (the law) not intending (to impose vat on tolls) but there are different authors (of the law) and they look at it in a different manner," she said during the hearing. Extra charges? Recto also questioned the BIR's plan to "round off" the amount of VAT to be charged on tollway users. "I don't know how the comissioner would have a right to round off tax rates," he said. But Henares said they would not be collecting a single centavo more than the 12-percent VAT. She noted, however, that the decision to round off the tax rates was made by the Toll Regulatory Board (TRB) to make it easier for the users to pass through the tollways. "The TRB is trying to be accommodating," she said, adding that no tollway user would want to be stuck in traffic just because the operators could not give enough coin change. But Enrile insisted that only Congress has the power to implement such a move. "You are not Congress, you cannot round off, the power to tax is a function of Congress. You are only implementors, you cannot legislate," he said. Recto also raised the "impracticality" of having to issue receipts at every toll booth because of the imposition of VAT. "(This) may affect the volume of traffic in the area," he said. Where does the 'extra' VAT go? Henares said that they have yet to decide where they will use the "extra" money that would be collected. She said they will probably set up a trust fund or escrow account until they have decided what to do with it. But Drilon said that only Congress can approrpriate public funds. "You have no authority to collect, worse, to make an illegal disbursement," he said. "You cannot do what you are doing without a clear authority. You are imposing sanction on people unsupported by law," added Enrile. Henares, for her part, said that they can give the money to the national treasury to finance the priority projects of the Aquino administration. Meanwhile, Piston secretary-general George San Mateo said he fears the effect the toll hikes will have on drivers and commuters. "Talagang mamumulubi po kami nito, manenenegative kami (We will really be affected by this, we might not even earn enough to break even)," he said. Recto, however, said that they don't have a choice but to leave the matter to the SC. — GMANews.TV