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Friday, September 02, 2005
Expanded VAT law valid, SC rules 15 to 0
MANILA -- The Arroyo administration scored two successive victories in the political and legal fronts. A day after the House committee voted to throw out three impeachment complaints against the President, the Supreme Court (SC) ruled that the Expanded-Value Added Tax (E-VAT) Law is valid.
In a unanimous vote, the High Court upheld Thursday the constitutionality of the E-VAT Law, which Malacañang has said was crucial in addressing the government's budget deficit and debts.
"The court cannot strike down a law as unconstitutional simply because of its yokes," the court said in an 84-page decision penned by Associate Justice Alicia Austria-Martinez.
Malacañang said the SC decision is a "welcome development."
"This reopens the door to greater fiscal stability, more investments and jobs," said Presidential spokesman Ignacio Bunye.
The opposition led by Representative Francisco Escudero, on the other hand, said now is not the right time to implement the law as it will mean additional burden on the people, given the rising world oil prices.
However, in a news conference, SC spokesman Ismael Khan Jr. said not one provision of the controversial tax law gained the necessary eight votes for it to be struck down as unconstitutional.
In effect, the temporary restraining order (TRO) handed down by the High Tribunal last July 1, the very same day of implementation of the law, is deemed lifted within 15 days upon receipt of the decision by the parties.
If a motion for reconsideration is filed by any of the petitioners, the court will decide if it should be given due course. The TRO is deemed lifted when the decision becomes final and all the parties have been notified.
In its ruling, the 15-member tribunal junked the contention of opponents of the new tax law that the standby power granted to the President to raise VAT rates from 10 to 12 percent next year constitutes undue delegation of the legislature's exclusive taxing power.
The law expands the VAT coverage to include electricity, fuel, and transport among other previously exempt sectors.
In a report submitted to the SC, the Department of Energy said in terms of real price increase, the E-VAT will impact the most on liquefied petroleum gas, with an estimated P30.42 per cylinder increase based on the August 15 price of P392.50, resulting in an estimated selling price of P422.92 per cylinder.
In real peso terms, unleaded gasoline would have the next biggest nominal price increase at P2.80 per liter, followed by regular gasoline at P2.21, kerosene at P1.88 and bunker fuel at P1.30, with diesel at the lowest with only P.70.
However, Energy Secretary Raphael Lotilla has assured that the full impact of 10 percent VAT will not be passed on to consumers because the excise tax on oil products will be removed.
Budget Secretary Romulo Neri said full implementation of the new VAT law could help bring down the government's budget deficit to P124.9 billion next year.
"We expect an additional P78 billion in revenues from the VAT in 2006 alone," he said.
The SC's freeze order on the E-VAT Law had turned off investors and shook the financial markets.
Receiving news of the SC decision Thursday, Cebu Chamber of Commerce and Industry president Robert Go said it will restore the confidence of the business community.
But Souie Mercado, president of the Association of Concerned Commuters and Consumers (AC3), said the ruling is "very unfortunate." He hopes it will not start protests.
The temporary restraining order on the E-VAT Law came on petitions of party-list group Abakada Guro, the House minority bloc led Escudero, Senate Minority Leader Aquilino Pimentel Jr., the association of petroleum dealers affiliated with Caltex, Petron and Shell, and Bataan Gov. Enrique Garcia Jr. (Sun.Star Cebu/AP/Sunnex)
(September 2, 2005 issue)
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