SC not lifting restraining order vs 12% VAT on toll rates

The Supreme Court has ruled against the government's petition to lift the temporary restraining order (TRO) on the collection of a 12-percent value-added tax (VAT) on charges for the use of roads and highways. In a resolution dated November 23, the high tribunal gave "due course" to the consolidated petitions of former Nueva Ecija Rep. Renato Diaz and former Trade assistant secretary Aurora Timbol, saying that charges on the use of roads and highways are excluded from the list of service fees subject to VAT. "Considering the allegations, issues, and arguments adduced in the petition, as well as in the comment thereon, the court resolved to give due course to the petitions," said the court. The SC likewise resolved to "defer action" on the motion for reconsideration filed by Finance Secretary Cesar Purisima and Bureau of Internal Revenue commissioner Kim Hacinto-Henares that sought to lift the TRO. Last August 13, the court issued the TRO on the imposition 12-percent VAT on tolls. The government, through Purisima and Henares, asked the court to remove the restraining order. But on November 23, the court ordered the parties to the case to submit within 10 days their respective memoranda, or both parties' final pleadings before the case is deemed submitted for decision. Petitions vs VAT on tolls Diaz and Timbol have both insisted that tolls cannot be subjected to value-added taxes because these are not covered by Republic Act No. 8424, or the Comprehensive Tax Reform Act of 1997, and the RA 7716, or the Expanded VAT Law. They likewise said that Congress must first approve the imposition of VAT on tolls, saying that the BIR — which is part of the executive branch — will usurp legislative powers. The government, however, argued that implementing the 12-percent taxes will earn for the government some P1.3 billion in additional annual revenues. According to the BIR, the VAT on tolls should have been collected since 2005. — LBG/RSJ, GMANews.TV