Sen. Recto bucks VAT on toll

In a seeming about-face, Senator Ralph Recto is asking the administration to reconsider plans to impose the value-added tax (VAT) on toll fees and to increase train fares, saying they would be a breach of President Benigno Aquino III’s campaign promise.

Recto—ridiculed as “Vat-man” for vigorously pushing the tax measure during the previous Arroyo administration—earlier filed a bill seeking to exempt toll fees from the 12 percent VAT.

In the explanatory note to his Senate Bill 2914, Recto said the position now taken by the Bureau of Internal Revenue making toll operations VAT-liable was a breach of Mr. Aquino’s campaign promise that there would be no new taxes amid increasing fuel prices.

“It has also serious implications on the public-private partnership as the core economic resiliency plan of our present government,” he said.

Collection of the VAT on toll fees is set to begin on Oct. 1 at the North Luzon Expressway, South Luzon Expressway, Subic-Clark-Tarlac Expressway and Skyway.

Recto also urged the administration to reconsider the plan to increase the fares at the Light Rail Transit and Metro Rail Transit systems. The government wants to reduce the subsidies to the railways systems which currently stand at P8 billion annually.

“There is no need for any of these (increases) as far as I’m concerned,” Recto told reporters yesterday.

He said the government should first focus on public spending before collecting additional revenues.

“If that will not be enough, then let’s talk about whether we would raise taxes, fees or charges. But until we have spent the money we have, why would we increase (tolls and fares)?” he said.

Recto’s SB 2914 seeks to settle “whatever doubt in the interpretation and construction of our tax statutes as to whether or not toll operators are subject to VAT.”

The bill clarifies that “services of toll operators with toll operation certificate issued by the Toll Regulatory Board” should be exempted from VAT.

He said the bill would “underscore the legislative policy of exempting toll operators from VAT, which, according to the Supreme Court, must be expressly provided by law.”

A former lawmaker has also asked the high court to restore its previous order stopping the BIR from collecting the 12 percent VAT on toll.

In a motion for reconsideration, former Nueva Ecija Representative Renato Diaz argued that the court had previously ruled the toll as “user’s tax” in its decision in the case of Manila International Airport Authority vs Court of Tax Appeals et al. With a report from Marlon Ramos