EDITORIAL - Captive taxpayers

The administration that promised no new taxes is set to impose a 12 percent value-added tax on tollway operations. This will be on top of a looming 250 percent increase in toll rates in the newer portion of the South Luzon Expressway.

The VAT has been around for years so maybe the administration can argue that this is not a new tax. But the administration faces criticism that the planned tollways VAT is tantamount to double taxation, as pointed out by Sen. Juan Ponce Enrile. Revenue Commissioner Kim Henares argued that the toll is for road use while the VAT is for services.

Motorists do not see it that way. What they understand is that they are paying a toll to a private company for building and operating a road that the government could not afford to build itself. Consumers will also share the tax burden when the VAT is passed on to them through higher prices for the goods transported through the tollways, including basic food items.

In addition, the Bureau of Internal Revenue has announced plans to tax market vendors and sari-sari or convenience store operators as well as tricycle drivers. Widening the tax base and giving more people a financial stake in good governance could help in the battle against corruption, but again the administration must be prepared for criticism, including skepticism that the plan can be implemented properly.

Lawmakers have once again reminded the administration that before new or higher taxes can be imposed, revenue collection must first be improved. You know something must be amiss when the country’s top taxpayers are not big businessmen but entertainers. The government has resisted proposals to reform the tax structure, and politicians with an eye to the May elections passed a law allowing sweeping VAT exemptions for all senior citizens, regardless of their income levels.

To make up for the loss, corruption in revenue agencies and the overall weakness in tax collection, the new administration is going after captive groups for taxation, starting with the VAT on tollways. The inevitable public outrage could prematurely cut short any honeymoon with a new administration.