A PETITION questioning the imposition of 12-percent Value Added Tax (VAT) in the country's tollways was filed at the Supreme Court Wednesday, five days before its full execution August 16.

The protest was filed by former Nueva Ecija Representative Renato Diaz and former Trade Assistant Secretary Aurora Timbol, noting the Bureau of Internal Revenue and the Toll Regulatory Board have no legal basis in imposing the VAT on motorists.

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Diaz is the principal author in the House of Representatives of Republic Act 8424, otherwise known as the "Comprehensive Tax Reform Act of 1997" and one of the co-authors and sponsors of Republic Act 7716, known as the "Expanded VAT Law."

Timbol, who served during the term of former President Fidel Ramos, is one of the principal writers and initiators of the Consumer Code of the Philippines and a former consultant of the TRB Toll Operating Agreements (TOAs) and Supplemental Toll Operating Agreements (STOAs) between the government and its private sector partners.

In their petition for declaratory relief, Diaz and Timbol asked the SC to issue a status quo order to prevent the BIR and the TRB from imposing the VAT on tolls without legislative approval and to declare that toll fees are not included in the imposition of VAT.

The BIR through Commissioner Kim Henares has been directed by President Benigno Aquino III to revive the imposition of VAT.

But Diaz said that as a principal author of RA 8424 and co-author of RA 7716, he has openly stated that tolls on roads and highways are not included in the coverage of sale of services subject to VAT.

Thus, the imposition of 12-percent VAT on tolls is unconstitutional and can be considered as an "invasion" of legislative powers of Congress.

They further said that the high court already ruled in a 2006 case of Manila International Airport Authority vs. Court of Tax Appeals that toll is a user's tax, thus it logically follows that the imposition of VAT on a user's tax is in effect imposing a tax on a tax, and not a tax of on "sale of services."

"There can be no VAT if there is no sale of services. In the case at bar, the service being provided to the public is to use a road constructed under a BOT arrangement. The construction of roads and highways is primarily the role of the State," they said.

"Thus, to impose VAT on a user's tax is tantamount to a tax on public services. This is certainly violative of the provisions of the Constitution that taxes must be equitable," said petitioners," they added.

The group also said that adding another 12-percent tax on tolls will not only adversely affect the rate of recovery of the government's private partners in the tollway projects as it will also serve as additional burden on the motorists and commuters and will increase the costs of basic goods being transported to and from the provinces.

Timbol said that based on her studies, agreements between the government and its private partners on toll projects require the computation of the toll fees that may be collected by operators and VAT has never been included in any of these computations.

She added that the government may also be sending a wrong signal to investors that will damage the reputation of the present administration because of the unpredictability in its policies.

"Whatever additional revenues the BIR may collect as VAT on toll fees may only be used to compensate the private investors for the violation of the contracts between them and Government," she said.

Diaz and Timbol said that similar proposals have been made during the Arroyo administration to raise new taxes on tolls being paid by motor vehicle users, but they have consistently opposed them for lack of legal basis. (JCV/Sunnex)