TAX NEWS - JUNE 2010
Philippines Tax: VAT on tollways
People get disappointed when they are made to pay huge amounts of taxes and never feel that the taxes are returned to them in terms of social services or social facilities. Likewise, vehicle owners are not happy when they are made to pay large tollway fees while traffic gets jammed in the expressway or when there are few signs to prevent road accidents.
Remedies are still available to those who would like to be heard. The law mandates toll operators to announce the increase in toll fees three weeks before adjustments take effect. Aggrieved stakeholders may protest the increase in which case, a hearing shall be conducted.
In a country where taxes are "translated" and felt by the people only through giant boards with politicians' names and faces and labeled as "A Project of So and So," it is important that the BIR take pains to explain to the people why they have to pay these taxes.
Taxes are not evil; they are collected with the intention of using them for the public good. However, when the desired effect is not felt by thepeople, paying taxes becomes burdensome for them.
One reason our country's development has been stagnant is that we have not allotted enough funds to build good roads owned and operated by the government. What do we have now? We have semi-privately owned roads and we are trying to get revenue by exacting taxes from them. Now, isn't it ironic that we tax facilities that bring us development? Isn't it ironic that we try to clog the veins that bring us blood?
What is amusing here is that the BIR seems to have a hot eye for the tollways. It will need to reconsider whether taxing the toll operators should be on top of their list, or should they chase big-time tax evaders first? This opens a lot of questions. Does the government have enough political will to catch the big fishes that evade paying taxes? Or can it really reform the whole BIR to make it more transparent and accountable?
It seems, however, that no one would like to admit that they have been profiting from their ventures of providing public utilities, be it electric companies, water companies, or oil companies. Everyone is losing something; just as toll operators have been losing because of construction and improvement of roads, etc. What is being translated in the news is that this is a new tax imposed on users of tollways, when, in fact, these are back taxes against toll operators.
The question is, will and should the imposition of the Value-Added Tax (VAT) result in an increase in toll fees? According to the BIR, toll fees need not necessarily be raised in order to cover the 12% Value-Added Tax. Tollway operators have presumably incurred input tax credits, which can be used to reduce the amount of VAT that they must pay. Would toll operators do that? At present, revenues from highway operations amount to as much as P3 million a day.
Economists would argue that to alleviate, if not end, poverty, we must reform our taxation system in such a way that those who earn more are taxed more than those who earn meagerly. In the Philippines, such is not the case. It was good that the implementation of the VAT on tollways for April was delayed.
I think it would be best for the BIR to really think hard on how to implement its taxation policy on tollway operators (and other policies). It should closely look at the guidelines and implement them in such a way that stakeholders would not cry foul and so as not to retard the country's development.