MANILA, Philippines?A former trade and industry official and an ex-congressman who authored tax reform asked the Supreme Court to stop the imposition of value added tax on toll fees starting Monday.
Former Nueva Ecija First District Representative Renato Diaz and former Trade and Industry assistant secretary Aurora Ma. F. Timbol urged the high tribunal to issue a status quo order to bar the Bureau of Internal Revenue and the Toll Regulatory Board (TRB) from imposing VAT on toll fees.
They said looming imposition of VAT violates the Constitution and can be considered ?invasion of legislative powers.?
Diaz, principal author in the House of Representatives of Republic Act 8424 or the Comprehensive Tax Reform Act of 1997 and RA 7716 or the Expanded Value Added Tax Law, said toll fees are not included in the sale of services coverage of VAT.
?If the lawmakers did not include toll fees as subject to VAT, the BIR, therefore, should not by implication nor interpretation expand what the legislators enumerated under the law. To include matters which the legislators did not intend to include is considerably dangerous, as it is in effect, invading the legislative field,? they said.
Citing the high court ruling on Manila International Airport Authority v. Court of Tax Appeals (CTA), Diaz said toll fees are ?users tax.?
He said imposing VAT on user?s tax is in effect ?imposing tax on a tax and not a tax on sale of services.?
?There can be no VAT if there is no sale of services. In the case at bar, the service being provided to the public is to use a road constructed under a BOT (build-operate-transfer) arrangement. The construction of roads and highways is primarily the role of the state. Thus, to impose VAT on a user?s tax is tantamount to a tax on public services. This is certainly violative of the provisions of the Constitution that taxes must be equitable,? they said.
Meanwhile, Timbol said that during the time of former president Fidel Ramos the ?rights and benefits of investments acquired in good faith by the private sector partners of government shall be impaired by the impending VAT on toll fees.?
She explained that toll fees, based on agreements between government and private partners, were computed without incorporating VAT.
?In sum, whatever additional revenues the BIR may collect as VAT on toll fees may only be used to compensate the private investors for the violation of the contracts between them and government,? she said.