VAT Research

8/9/2019 VAT Research

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Aquino told: Don't blame GMA for VAT

on toll

abs-cbnNEWS.com

Posted at 08/15/2010 1:29 AM | Updated as of 08/15/2010 2:31 AM

MANILA, Philippines - The spokesperson of former President Gloria Macapagal Arroyoon Saturday criticized Malacaang for blaming the past administration for its policydecision to impose a 12% Value-Added Tax (VAT) on toll.

Former Presidential Management Staff (PMS) chief Elena Bautista-Horn said the Arroyoadministration had assessed the impact of imposing VAT on toll, and it found that it

would have a major effect. Thus, the proposal was set aside and placed under review.

"Tinalakay rin kay dating Pangulong Arroyo ang impact ng VAT sa toll sa mgagumagamit ng ating toll roads, at nakita nyang malaki ang epekto sa taong-bayan kaya'tpina-aral pa nya itong muli," she said.

(The impact of VAT on toll on toll road users was discussed with President Arroyo, andshe found out that it would have a big impact on the people, so she asked that it bereviewed.)

The Aquino government hopes to collect P1 billion monthly or P12 billion annually from

the VAT on toll to reduce the budget deficit.

Bautista-Horn said there were also many legal, technical and operational issues that hadto be settled first, but these were overtaken by the election of a new government. She saidthese legal and technical issues emerged again during the Senate hearing this weekpresided over by Senator Ralph Recto.

"Hindi ipinatupad ng Arroyo administration ang VAT sa toll dahil lumabas lahat angissues na tinalakay sa Senado at hindi pa nahanapan ng solusyon ang legal, technical andoperational issues ng maabutan na ng change of administration," she said.

She proposed that the Palace undertake staff work on the VAT before imposing it ratherthan blame the Arroyo administration.

"Sana gumawa ang Malacaang ng staff work nila bago sila nagmadaling ipatupad angVAT sa toll. Hindi maganda at tuwid na asal ang ibato sa nakaraang administration angkakulangan ng nakaupong administration sa kanilang paggawa ng homework ," Bautista-Horn said.


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Supreme Court stops planned increase in

toll rates

abs-cbnNEWS.comPosted at 08/13/2010 2:43 PM | Updated as of 08/14/2010 12:50 AM

MANILA, Philippines (UPDATE) - The Supreme Court (SC) on Friday issued separatetemporary restraining orders (TROs) to stop the planned imposition of the 12% value-added tax (VAT) on toll as well as the 250% hike in rates at the South Luzon Expressway(SLEx).

The SC issued the TROs based on the petition of former Nueva Ecija Rep. Renato Diazand former Trade and Industry official Aurora Ma. Timbol, and an omnibus motion filed

by lawyer Ernesto Francisco.

Diaz and Timbol questioned the imposition of the VAT, arguing that it isunconstitutional and an "invasion of legislative powers." They also said that toll isconsidered user's tax, and should therefore no longer be taxed.

Meanwhile, Francisco raised conflict of interest concerns over the hefty hike in toll ratesat SLEx. He said a copy of the SLEx supplemental toll operation agreement showed thatMark Dumol, a former chief of staff of then Public Works and Highways SecretaryGregorio Vigilar, was the signatory of the Malaysian investors in the SLEx rehabilitationproject.

SC spokesman Jose Midas Marquez said the court issued TROs to stop scheduledincreases in toll rates on Monday because it would be "very difficult to reimbursemotorists" should the court rule against them in the future.

On the VAT, Marquez said they are giving the government 10 days to file its comment.

"The court knows that this is imposition of taxes, and we all know that taxes are thelifeblood of the government. But then again, there are other equally important argumentsthat we have to take into consideration," Marquez said.

Sought for comment, BIR Commissioner Kim Henares told ANC: "I have not yetreceived the TRO [on the VAT imposition], so I don't know what it looks like. The onlyTRO I have copy of is on the South Luzon Expressway."

Nonetheless, she said the agency will follow the rule of law. "I've already stated in myprevious statement that it (VAT) will be implemented subject only to a restraining orderfrom the Supreme Court."


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"I hope [the court] will resolve this as soonas possible," she added.

Both Malacaang and the BIR said onThursday that barring any court

intervention, the implementation the VATon the use of major expressways wouldpush through starting next week.

The BIR expects to collect P1 billion a month in additional revenues from the VAT ontoll, which, it said, should have been implemented back in 2005, when the ExpandedVAT Law was enacted.

Sen. Ralph Recto, one of the authors of the controversial E-VAT Law, however, said thelaw never imposed VAT on tollways.

Source: http://www.abs-cbnnews.com/business/08/13/10/supreme-court-issues-tros-vs-toll-tax-slex-rate-hike

House Ways & Means chair proposes simple 6% VAT

Sunday, 15 August 2010 00:00

Mandanas: No need to hit toll fees with EVAT, govt collections will double

BY RENE Q. BAS EDITOR IN CHIEF

House of Representatives Ways and Means Committee Chairman Hermilando Mandanasbelieves his House Bill 1970, which would impose a 6 percent Value Simplified Tax orVAST in lieu of the present 12 percent Valued Added Tax (VAT), will quickly solve thegovernments revenue problemsand obviate the need to do things like levying the VAT on toll fees. He told The ManilaTimes the VAST is so simple, BIR collection of VAST due will double what the bureau

now gets from the VAT.

Simplicity and cutting out all possibilities for BIR collectors and examiners to use theirdiscretion in assessing the final VAT a person or a company had to pay is the key, Rep.Mandanas said.

House Bill No. 1970 changes the Value-Added Tax (VAT) system to the ValueSimplified Tax (VAST), and reduces the tax rate from 12 percent to 6 percent applicable
http://www.abs-cbnnews.com/business/08/13/10/supreme-court-issues-tros-vs-toll-tax-slex-rate-hikehttp://www.abs-cbnnews.com/business/08/13/10/supreme-court-issues-tros-vs-toll-tax-slex-rate-hikehttp://www.manilatimes.net/index.php/component/content/article/42-rokstories/23779-house-ways-a-means-chair-proposes-simple-6-vat-http://www.addthis.com/bookmark.php?v=20http://www.manilatimes.net/index.php/component/mailto/?tmpl=component&link=aHR0cDovL3d3dy5tYW5pbGF0aW1lcy5uZXQvaW5kZXgucGhwL2NvbXBvbmVudC9jb250ZW50L2FydGljbGUvNDItcm9rc3Rvcmllcy8yMzc3OS1ob3VzZS13YXlzLWEtbWVhbnMtY2hhaXItcHJvcG9zZXMtc2ltcGxlLTYtdmF0LQ%3D%3Dhttp://www.manilatimes.net/index.php/component/content/article/42-rokstories/23779-house-ways-a-means-chair-proposes-simple-6-vat-?tmpl=component&print=1&page=http://www.manilatimes.net/index.php/component/content/article/42-rokstories/23779-house-ways-a-means-chair-proposes-simple-6-vat-?format=pdfhttp://www.abs-cbnnews.com/business/08/13/10/supreme-court-issues-tros-vs-toll-tax-slex-rate-hikehttp://www.abs-cbnnews.com/business/08/13/10/supreme-court-issues-tros-vs-toll-tax-slex-rate-hikehttp://www.manilatimes.net/index.php/component/content/article/42-rokstories/23779-house-ways-a-means-chair-proposes-simple-6-vat-


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to the same goods and services now subject to VAT.

All the exemptions under the VAT system will continue under the VAST. In fact, VASTwould not only exempt senior citizens and persons with disabilities. It would also exemptretired Armed Forces servicemen, retired policemen, retired Customs policemen and

Bureau of Jail Management and Penology officers.

In Mandanas computations and studies, VAT-tax evasion and shaving happen becausethe VAT-liable companies and persons are allowed to deduct refunds and tax credits fromtheir VAT payments. HB 1970 would eliminate all and any tax credit mechanism orscheme that are now allowed under the VAT system.

The removal of these deduction mechanisms and schemes, in computing which thegovernment agent can enter into a negotiated settlement with the VAT-liable company,would increase tax collection efficiency and even double the governments VATrevenues even if the VAST rate is only 6 percent or half the VATs 12 percent.

Simplifying the collection system will reduce opportunities for corruption, removing theinput tax provisions will make it difficult to escape paying or altering the VAST amountto be paid, Mandanas said. Discretion and interpretation of what should be paidbecause of deductible expenses and tax credits open the way for corruption and evenoutright misdeclaration.

Asking The Times not to mention their names, Mandanas told this writer some majorfirms whose profits are in the billions whose VAT payments are almost zero because ofthe input tax provisions of the present law.

Mandanas bill also favors small and medium entrepreneurs by increasing the amounts ofsales or leases that would not be subject to VAST.

Under the present law for the VAT or EVAT, sales of small sari-sari stores or restaurantswith sales of more than P1.5 million per year are subject to the 12 percent VAT. Thesesame small enterprises would only be subject to the 6 percent VAST if their sales exceedP2.5 million. If their sales are below P2.5 million, these enterprises will only be levied a3-percent VAST.

VAST on real estate transactions kicks in only if the price is higher than the present VATceilings. Land sold for less than P2.5 million and a house and lot sold for less than P3.5million would be VAST exempt. The ceilings under VAT are P1.5 for land and P2.5 forhouse and lot transactions.

In congressman Mandanas computations, with a much lower VAST of just 2 percent, thegovernment collection will equal the present total VAT collection of 12 percent. This isbecause all transactions subject to VAST would be paid without resistance andcorruption.


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With the 6-percent VAST, Mandanas sees revenues going higher, even double, whatVAT now collects.

VAT payments are now the second largest source of government tax revenues. In firstplace is revenue from corporate and personal income taxes.

After the VAT are collections from excise taxes (the so-called sin taxes from alcoholand tobacco and also excise taxes from petroleum and mineral products) followed bypercentage taxes (those from banks, insurance premiums and amusement).

If his proposed law were passed, Mandanas also said, a framework to facilitate furtherreduction of the VAST rate would be established by further simplifying and reducingcomplicated and discretionary tax provisions.

Mandanas is sure the VAST will make the people develop a friendlier perception ofgovernment tax impositions.

The VAST, he said, gets rid of the present system that creates a situation of loopholes andleakages that increase occasions for corruption.

It will also make foreign investors view the Philippines more favorably for having a lowVAT tax rate. Most of the most successful economies have low VAT rateslikeSingapore.

Reaction from Finance

An undersecretary of the Department of Finance, however, told The Times Mandanasproposed law would push the Philippines back to primitive times.

Undersecretary Gil Beltran of the DOF said House Ways and Mean Committee ChairmanHermilando Mandanas proposed VAST law would not be easy to implement in a moresophisticated economic environment like the Philippines.

He said such a simple sales tax system was good only for economies that do notproduce value-added products (i.e. processed goods) and just import all of their needs.These are countries that have single-crop economies, with minimal manufacturing.

The Fair Tax proposed in the US

Simple taxation systems are, however, also being proposed in the United States, a moresophisticated economy than the Philippines

Respected governance experts, lawmakers and economists are proposing the abolition ofall taxes especially the income tax and the VATand replacing these with one singleand simple tax to provide all the necessary government revenue.

This is called The Fair Tax.

It is a single broad national consumption tax on retail sales.


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It has been proposed in bills filed in the US Congress.

The tax would be collected once at the point of purchase or point of sale on all new goodsand services for personal consumption.

The proposal also mandates a monthly payment to all family households of legal USresidents as an advance rebate, or a prebate, of tax on purchases up to the poverty level.

This would protect poor families.

Wikipedia explains that the sales tax rate would be 23 percent of the total paymentincluding the tax ($23 of every $100 spent in totalcalculated similar to income taxes).This would be equivalent to a 30 percent traditional US sales tax ($23 on top of every$77 spent$100 total). This rate would then be automatically adjusted annually based onfederal receipts in the previous fiscal year.

With the rebate taken into consideration, the FairTax would be progressive onconsumption, but would also be regressive on income at higher income levels (asconsumption falls as a percentage of income).

Source: http://www.philnews.com/headlines/2010/headline_news_0814d.htm

Supreme Court stops tax on tolls, 250% hike on expressway charges

by Rey E. Requejo

THE Supreme Court on Friday stopped the government from imposing a 12-percentvalue-added tax on tollway charges nationwide and a 250-percent increase in fees forusing the South Luzon Expressway.

Court spokesman Jose Midas Marquez said Chief Justice Renato Corona issuedtemporary restraining orders over the two cases to stop the new charges that were to startMonday.

The chief justice is authorized to issue a temporary restraining order on behalf of theentire Court when it is not in session, but the order will need to be confirmed by thejustices when they meet on Aug. 17, Marquez said.

The Court ordered Finance Secretary Cesar Purisima and Internal RevenueCommissioner Kim Henares to comment within 10 days on a petition against the highercharges filed by former Nueva Ecija Rep. Renato Diaz and former Trade and IndustryAssistant Secretary Aurora Maria Timbol.
http://www.philnews.com/headlines/2010/headline_news_0814d.htmhttp://www.philnews.com/headlines/2010/headline_news_0814d.htm


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Marquez said the chief justice issued temporary restraining orders against the newcharges because those were scheduled to take effect Monday, and it would be difficult torefund motorists later if it found there was no legal basis for the government to collect thetax. But he said the order could be lifted once the Court heard from the government.

The Court knows that taxes are the lifeblood of the government. Thats why we are verycareful on restraining taxes, Marquez said.

But then again, there are equally important arguments that we have to take intoconsideration.

Earlier, Internal Revenue ordered the Toll Regulatory Board to impose the 12-percentvalue-added tax on tolls starting Aug. 16. It said the tax would add P1 billion monthly togovernment coffers, and that it should have been collected starting 2005.

The Court, meanwhile, is consolidating the petitions against the 250-percent increase in

the charges that the South Luzon Tollway Corp. and Manila Toll Expressways Inc. are setto impose.

In separate petitions, Albay Gov. Joey Salceda and lawyer Ernesto Francisco Jr. sought arestraining order on the new rates and asked the Court to dump the supplemental tolloperation agreement for the rehabilitation, widening and expansion of the expressway.

Marquez said the Court already was deliberating on the petitions, and it was expected todecide within a month or two.

On Wednesday, Diaz and Timbol asked the Court to stop the government from adjusting

the tolls to reflect the value-added tax beginning Monday. They also asked the Court todeclare that tolls are not included in the sale or exchange of services under theComprehensive Tax Reform Act or covered by the Expanded Value-Added Tax Law.The tax on tolls could not be carried out without Congresss approval.

South Luzon bus companies led by Rep. Homer Mercado on Friday said they wouldsuspend their petition for a 40-centavo-per-kilometer fare increase in view of the highcourts temporary restraining order.

Earlier, the bus companies said they would pass on the higher tolll fees to the ridingpublic.

Senator Vicente Sotto III hailed the Courts decision Friday, saying it stopped InternalRevenues cold-blooded decision to impose the tax.

Senator Ralph Recto did the same, saying there was nothing in the tax laws authorizingthe collection of the value-added tax from motorists.


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The [temporary restraining order] will give the government time to do some legislativearcheology and search for a section in past [tax] laws which clearly stipulates that suchtax will be imposed on toll on roads. Good luck on that expedition, said Recto, chairmanof the Senate ways and means committee.

You can only implement a tax if its based on legislation, not on one agencysimagination. The river cannot rise above the source,

Asked for comment, Henares said she had no choice but to follow the Supreme Courtsdecision. .

This is the job, she said.

I defended our position being an implementer of laws, but if the courts say otherwise,then we have no choice but to follow

Source: http://www.manilastandardtoday.com/insideNews.htm?f=2010/august/14/news1.isx&d=2010/august/14

World | Philippines

Supreme Court stops Philippines

government from raising toll fees

A temporary restraining order (TRO) was issued against the proposed implementation ofa 12 per cent value added tax (VAT) on toll rates at the South Luzon Expressway, saidSupreme Court spokesman Midas Marquez.

By Barbara Mae Dacanay, Bureau Chief Published: 00:00 August 14, 2010

Manila: The Supreme Court stopped the government from its plan to raise toll feesfollowing complaints from lawmakers and consumer's group that toll fees ballooning by300 per cent, would inconvenience private and mass commuters, a spokesperson saidyesterday.

A temporary restraining order (TRO) was issued against the proposed implementation ofa 12 per cent value added tax (VAT) on toll rates at the South Luzon Expressway, saidSupreme Court spokesman Midas Marquez.
http://gulfnews.com/


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"The respondents, DOJ (Department of Justice) and BIR (Bureau of Internal Revenue)must file their comments within 10 days," Marquez said.

VAT on toll fees was part of the law which was passed by Congress during the time offormer President Gloria Arroyo, but its collection was deferred at the time, explained

President Benigno Aquino's spokesperson Edwin Lacierda.

Only the Apex Court can stop the plan of the justice department and the BIR fromimplementing VAT on toll fees in all major road arteries from Metro Manila, expertssaid.

Earlier, a group of lawyers led by Ernesto Francisco, former congressman Renato Diazand former assistant trade secretary Aurora Timbol filed for the TRO, saying that toll feeswere not included in the imposition of value added tax.

In a hearing on Thursday, senators said they were opposed to the plan of BIR

commissioner Kim Jacinto-Henares to impose VAT on toll fees starting August 16.

The BIR said it could collect 1 billion pesos (Dh83.3 million) a year from the impositionof VAT on toll fees on major roads, coastal road, elevated road, and arterial roads tosouthern Luzon.

Senate President Juan Ponce Enrile, Senators Ralph Recto and Franklin Drilon whobelong to Aquino's Liberal Party, said that government services were VAT-free, addingthat tax on toll fees would result in a chain reaction such as high transportation fee formass commuters and high toll fees on private car users.

Sen Recto, VAT's author said that BIR was wrong in interpreting VAT, adding that BIRwas not justified in its plan to add VAT on toll fees.

Source: http://gulfnews.com/news/world/philippines/supreme-court-stops-philippines-government-from-raising-toll-fees-1.667851

SC bucks higher toll tax, rates

Saturday, 14 August 2010 05:07 PM Maui A. Hermitanio

Supreme Court Chief Justice Renato Corona has issued temporary restraining orders (TRO) to stop thescheduled implementation of 250-percent toll fee rate hike at the South Luzon Expressway (SLEx) and the12-percent Value Added Tax (VAT) on toll fees.

Both the VAT on toll and the SLEx toll hike were scheduled to be implemented on Monday, August 16.

According to Supreme Court spokesperson Midas Marquez, the restraining order was in response to thepetition of former Nueva Ecija Rep. Renato Diaz and former Trade assistant secretary Aurora Timbol, who
http://gulfnews.com/news/world/philippines/supreme-court-stops-philippines-government-from-raising-toll-fees-1.667851http://gulfnews.com/news/world/philippines/supreme-court-stops-philippines-government-from-raising-toll-fees-1.667851http://thepoc.net/breaking-news/local/9336-sc-bucks-higher-toll-rates.htmlhttp://en.wikipilipinas.org/index.php?title=Supreme%20Courthttp://gulfnews.com/news/world/philippines/supreme-court-stops-philippines-government-from-raising-toll-fees-1.667851http://gulfnews.com/news/world/philippines/supreme-court-stops-philippines-government-from-raising-toll-fees-1.667851http://thepoc.net/breaking-news/local/9336-sc-bucks-higher-toll-rates.htmlhttp://en.wikipilipinas.org/index.php?title=Supreme%20Court


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