TRO ON TOLLWAY VAT STAYS; SC JUNKS GOVT BID TO LIFT IT

MANILA, DECEMBER 10, 2010
(BULLETIN) By EDMER F. PANESA – The Supreme Court (SC) has junked a government bid to lift the temporary restraining order (TRO) it issued against the imposition of a 12-percent value-added tax (VAT) on tollway charges nationwide.

In a resolution dated November 23 but released only Wednesday, the SC resolved to “give due course” to the petition questioning the constitutionality of the VAT on toll jointly filed by former Nueva Ecija Rep. Renato Diaz and former Assistant Secretary Aurora Maria Timbol of the Department of Trade and Industry.

The VAT on toll rates was supposed to take effect last August 16 but was suspended after the SC issued a TRO on August 13 or three days before the start of the implementation of the new tax measure.

The SC, in giving due course to the petition, took into consideration the “allegations, issues, and arguments” raised therein as well as the comment filed by respondents Finance Secretary Cesar Purisima and Commissioner Kim Jacinto Henares of the Bureau of Internal Revenue (BIR).

It did not lift the TRO against VAT on toll although this was requested by Purisima and Henares in their consolidated comment. The SC instead resolved to treat their comment as answer to the petition.

The High Court also required the parties to submit their respective memorandums expounding their positions within a non-extendible period of 10 days from notice. Thereafter, the petition will be deemed submitted for decision, it added.

In their petition, Diaz and Timbol urged the Court to declare that toll rates are not included in the sale or exchange of services under Republic Act (RA) 8424 or the Comprehensive Tax Reform Act of 1997 and whether or not it is covered by RA 7716, otherwise known as the Expanded VAT Law.

They also want the SC to declare that VAT cannot be imposed on tollrates without the approval of Congress, pointing out that the BIR’s act was an “invasion of legislative powers.”

Henares earlier issued a revenue memorandum circular directing the Toll Regulatory Board to implement the VAT on toll way charges starting last August 16.

When fully implemented, the 12-percent VAT on toll charges would translate to P1.3 billion in additional annual revenues for the government.

According to BIR, the tax should have been collected since 2005.

Purisima and Henares argued in their comment that “to stop the much needed implementation of a valid tax law is to ignore the legal truism that taxes are the lifeblood of the government.”


Chief News Editor: Sol Jose Vanzi

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