Aquino implements 1st tax hike

MANILA - Breaking the promise not to hike tax rates, President Benigno Aquino III's administration will implement the first round of tax increase to major Luzon tollways on August 16.

Bureau of Internal Revenue (BIR) commissioner Kim Henares said the imposition of the 12 percent value added tax (VAT) would be implemented in North Luzon Expressway (NLEX), South Luzon Expressway (SLEX), the Subic-Clark-Tarlac Expressway (SCTEX), and the South Tagalog Arterial Road (Star) tollways.

Updates on President Benigno Aquino III's presidency

According to the BIR, VAT is a form of sales tax and indirect tax, which may be shifted or passed on to the buyer, transferee or lessee of goods, properties or services. It is a tax on consumption levied on the sale, barter, exchange, or lease of goods or properties and services.

Last January 21, Aquino, in his speech before the Makati Business Club, said: "In addressing the looming fiscal crisis, good governance and the drive against corruption are critical components in our strategy. We will refrain from imposing new taxes or increasing tax rates."

Also, during his presidential campaign, he vowed not to impose new or increase tax rates if he will win in the race.

However, Henares said the imposition of the VAT on toll fees is proof of the President's "political will to do what is right no matter if it might not sound so politically palatable to some people."

She added that they already expect a strong opposition to the VAT, which is normal whenever "you increase something."

The BIR official also said the public should remember that the VAT should have been imposed as early as 2005 but was never implemented, adding that the collection of the VAT would benefit more people.

Though implemented under the Aquino administration, Henares pointed out that this is not a new measure but merely an implementation of an existing one.

"This is an existing tax that should have been collected since 2005," she said.

Henares said they expect to raise at least P1 billion a month from the move.

Earlier, former National Treasurer Leonor Briones chided the "no new tax" plan of Aquino, saying his administration might have no funding for expenditures for the rest of the year and would have nothing to use given the already high deficit from the Arroyo administration.

Department of Finance Undersecretary Gil Beltran also previously said that Aquino should rethink on his plan not to hike and impose tax saying it will adversely affect the government's budget for social and pro-poor services such as health, education, and infrastructure.

Beltran added that several state firms stand to lose their subsidies if the government fails to raise additional revenue through new tax measures.

He explained that if the next government plans to maintain the level of spending without new tax measures, the state has no recourse but to tap more borrowings to finance expenditures.

Meanwhile, the International Monetary Fund (IMF) does not favor new taxes for the Philippines in the near term but instead stressed the need to improve tax administration and structure as well as compliance.

Vivek Arora, IMF assistant director in the Asia and Pacific Department, said they welcome the government's goals to improve fiscal situation and lessen fiscal deficit over the medium term.

However, increasing the revenues through new tax measures is not the answer to address these goals, Arora added. (JMR/PNA/Sunnex)