SC asked to reconsider toll tax ruling

MANILA, Philippines - The Supreme Court (SC) was asked yesterday to reconsider its ruling allowing the Bureau of Internal Revenue (BIR) to impose a value-added tax (VAT) on the earnings of tollway operators.

In a 36-page motion obtained by The STAR, former Nueva Ecija congressman Renato Diaz and former trade assistant secretary Aurora Ma. Timbol insisted that toll charges should be exempt from taxes. The high court, in its ruling last month, cited lack of law exempting the fees charged in North and South Luzon Expressways and other major superhighways from the 12-percent VAT.

Diaz and Ma. Timbol cited the ruling of the high court on the case of Manila International Airport Authority vs. Court of Tax Appeals where it declared toll charges as user’s tax.

“The imposition of VAT on a user’s tax is in effect imposing a tax on a tax, and not a tax on ‘sale of services.’ There can be no VAT if there is no sale of services,” they said.

The argued that imposing VAT on toll charges is “impractical and incapable of implementation” and that it “will just create an arbitrary and unwarranted financial burden to motorists in Luzon.”