Supreme Court allows VAT imposition on tollway rates

Motorists should brace themselves for higher fees now that the Supreme Court has ruled that tollway rates are subject to value-added tax (VAT). In a unanimous decision last July 19, the Supreme Court lifted the temporary restraining order (TRO) it issued last year against the plan of the Department of Finance and its attached agency, the Bureau of Internal Revenue (BIR), to impose VAT on toll rates. The high tribunal then dismissed the petitions of Renato Diaz and Aurora Timbol who argued that toll rates should not be subject to taxes. The SC said the BIR did not usurp legislative power or expand the coverage of the VAT law when it sought the imposition of VAT on tollway operations. The high court noted the absence of a law exempting tollway operations from VAT. "If the legislative intent was to exempt tollway operations from VAT, as petitioners strongly allege, then it would have been well for the law to clearly say so. Tax exemptions must be justified by clear statutory grant and based on language in the law too plain to be mistaken," the SC said. "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," it added. Supreme Court Justice Roberto Abad wrote the decision, which was unanimously concurred by the rest of his colleagues. The high court also upheld the Executive branch's power and authority to impose VAT on franchise grantees like tollway operators. "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," it said. "The executive exercises exclusive discretion in matters pertaining 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," it added. The SC's decision lifted the TRO it issued against the imposition of VAT on toll rates last August 13. In October last year, the SC also lifted the August 13 TRO issued against the implementation of higher toll rates on at least three tollway roads. Voting unanimously last October, the high court allowed the North Luzon Expressway, South Luzon Expressway, and Skyway to hike their fees. — LBG, GMA News