VAT on Toll

8/4/2019 VAT on Toll

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12% VAT on Toll

VAT has already affected the purchasing capacity of Filipinos especially those whose

salary is below the required cost of living, and those who are underemployed or have

no jobs at all. Yet, the Aquino government insists on extending this VAT to toll fees. In

recognition of the negative consequences of this poorly reviewed policy, I think thegovernment should carefully address the following issues and concerns regarding the 12%

VAT on toll:

First, tax on toll is a violation of enacted tax laws. Nueva Ecija Rep. Renato Diaz,

principal author of RA 8424 or the Comprehensive Tax Reform Act of 1997, and co-author

of RA 7716 or the Expanded VAT Law, said toll fees are not included in the coverage of sale

of services subject to VAT so the government should not be imposing tax on toll.

Moreover, Sen. Ralph Recto, the author of RA 9337 or the amended EVAT law, claims that

the 12% VAT the government imposes on toll charges is illegal as it is not covered by thelaw he legislated. Sen. Recto clarified that the law excludes land-based transportation

contrary to what the Bureau of Internal Revenue (BIR) claims. If its not the intent of the

legislator for the law to be exercised as such, then the BIR should not be using his law as

ground for their imposition of VAT on toll. The BIR should stop imagining tax laws that

intends to siphon money from taxpayers, and implement only taxes that are legislated.

Second, tax on toll constitutes double taxation. This is because toll is a users tax already

imposed on the motorists using the expressways. VAT on a user's tax is in effect imposing a

tax on a tax, and not a tax of on "sale of services." Tolls are paid by the consumers to

compensate the provider for his capital outlay investment in the establishment of theexpressway. Payment of toll is, hence, reasonable but payment of VAT I think is too much

for the motorists who already pay Income taxes, Road Users Tax, and other government

mandated fees.

Third, tax on toll will not deliver its purpose to augment government revenue. Why?

Because bulk of the VAT collections will go only to the tollway operators, and not to the

government. This is because tollway operators will be required to remit only around 3-

12% of their collection, so they are able to retain part of the VAT as their input tax a tax

without limit as much as it can be supported by receipts. Unfortunately, the government

does not have the equipment, personnel, and political will to check if the input tax being

claimed by these toll operators is true, and correct. The result: confusion and tax collection

reduced by as much as 75%.

Fourth, tax on toll will lead to increase in price of goods and services in the market

affected by the additional cost in distribution. Merchants paying the 12% are liable to

pass on to the consumers the entire 12% VAT as it is part of their actual business cost. With


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rising prices of basic commodities due to continuing economic crisis, and devastating

effects to agriculture of recent typhoons which have visited the country, VAT on toll is ill-

advised and ill-timed as it would only add to the misery of the people. As observed by

Bayan secretary-general Renato Reyes Jr., most of the affected areas are in Cagayan Valley,

Central Luzon, Calabarzon, and Bicol regions that directly rely on the North Luzon and

South Luzon expressways to facilitate their economic activities. Moreover, relief operations

to distressed areas in these provinces will most likely be affected by the VAT on toll fees.

Civic groups might be discouraged to donate as they may not be willing to incur additional

expense on the delivery of their donations.

Fifth, tax on toll will reduce the already meager income of provincial bus drivers. To

protect themselves from the debilitating effects of VAT, they would most likely increase

transportation fares thereby burdening their passengers who have no choice but to rely on

these public transportations which use the expressway to get them to Manila from their

province. The government said the effects of VAT on toll will be very insignificant. I darethem to say that to poor passengers who have long tightened their belts, and yet still find it

hard to make ends meet.

Finally, the government claims that tax on toll will be channeled towards

government endeavors which they see fit to address widespread poverty in the

country. And what are these programs? Pork barrel for corrupt politicians, debt service,

CCTs, and other stop-gap measures against poverty. Would these programs bring about

development? We all know that it wont.

I believe VAT on toll is unnecessary as the government has a number of alternative sources

of income, which it can tap to augment its revenue. Sin tax, for instance. I think there is no

need to inexorably inflict much distress to the already suffering masses. Do not provoke

unnecessary public outrage. Scrap the 12% VAT on toll!

REFERENCES:

Autoindustriya. (2011 September 16). Solon moves to prevent 12% VAT on toll fees. Retrieved

fromhttp://www.autoindustriya.com .

Calonzo, A. (2010 August 11). Aquino allies question 12% VAT on toll rates. Retrieved from

http://www.gmanews.tv .

Carcamo, D. (2011 September 29). Defer 12% VAT on toll, Aquino urged. Philippine Star.

Retrieved fromhttp://www.philstar.com.
http://www.autoindustriya.com/http://www.autoindustriya.com/http://www.autoindustriya.com/http://www.gmanews.tv/http://www.gmanews.tv/http://www.philstar.com/http://www.philstar.com/http://www.philstar.com/http://www.philstar.com/http://www.gmanews.tv/http://www.autoindustriya.com/


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De Vera, E. (2011 September 30). VAT on toll starts tomorrow. Malaya. Retrieved from

http://www.malaya.com.ph.

Manalastas, J. (2011 September 5). Casino calls for suspension of 12% VAT on tolls. Retrieved

fromhttp://www.journal.com.ph.

Panay, E. (2011 September 30). SC won't stop VAT on toll. Philippine Star. Retrieved from

http://www.philstar.com.

Panesa, E. F. (2010 August 13). SC stops VAT on toll. Manila Bulletin. Retrieved from

http://www.mb.com.ph.

Pascual, F. D., Jr. (2011 October 2). 12% VAT on tollways big gamble for P-Noy. Philippine

Star. Retrieved fromhttp://www.philstar.com.

Villanueva, M. A. (2011 October 3). Getting act together. Philippine Star. Retrieved from

http://www.philstar.com.
http://www.malaya.com.ph./http://www.malaya.com.ph./http://www.journal.com.ph/http://www.journal.com.ph/http://www.journal.com.ph/http://www.philstar.com/http://www.philstar.com/http://www.mb.com.ph/http://www.mb.com.ph/http://www.philstar.com/http://www.philstar.com/http://www.philstar.com/http://www.philstar.com/ArticleListByAuthorName.aspx?AuthorName=Marichu+A.+Villanuevahttp://www.philstar.com/http://www.philstar.com/http://www.philstar.com/http://www.philstar.com/ArticleListByAuthorName.aspx?AuthorName=Marichu+A.+Villanuevahttp://www.philstar.com/http://www.mb.com.ph/http://www.philstar.com/http://www.journal.com.ph/http://www.malaya.com.ph./

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VAT on Toll