Fuentebella’s HB 1625, VAT & TOLL Fee on SLEX, Enrile’s Opinion & PAGCORP’S Privatization illogical



The Daily Tribune dated July 24, 2010 reported that Rep. Arnulfo Fuentebella (NPC, CamSur, 4th District) filed House Bill 1625 yesterday calling for the legislation of an act removing the sale of electricity power from the coverage of Expanded Value added tax (EVAT) law by amending certain provisions of the 1997 National Internal Revenue Code as amended by Republic Act 9337 for other purposes.

In his explanatory note, Fuentebella noted that the cost of electricity in the Philippines is known to be one of the highest in Asia and his bill proposes to mitigate the impact of high electricity prices by removing the sale of electric power from the ambit of EVAT.

RA 9337 also known as the EVAT Law amended Section 108 of the 1997 National Internal Revenue Code by including sales of electricity by generation companies, transmission and distribution companies as part of the definition of “sale of exchange of services” subject to VAT. Said Act also imposed VAT on fuel and oil products used in the production and generation of all electricity.

For commercial and industrial customers, the Vat has resulted in higher cost of goods and services which can be passed on to the consumers. It is the residential customers who are hardest hit by VAT.

In the sale of electric service there is VAT on Generation Charge, VAT on the Transmission Charge, VAT on the Metering Charge and VAT on the Supply Charge. However, the VAT has also been applied on components of the bill that do not represent a service rendered. There is VAT on the System Loss Charge and a VAT on the Lifeline Subsidy Rate. There is even a VAT on the Local Franchise Tax component of the electric bill.

“If the government is serious in lowering power rates, it must remove VAT on electricity,” Fuentebella said.

The imposition of the EVAT was what former President Gloria M. Arroyo wanted. Does President Noynoy Aquino also want to continue imposing it on his heavy abandoned constituents?

Internal Revenue Commissioner Kim Jacinto-Henares announced that a Value Added Tax of 12 percent on expressway toll as well as 233 percent increase in the toll fees for the use of SouthLuzon Express Way (SLEX) will be imposed this August 16, 2010. That the tax would generate P1 billion a month for the government. This will be a big burden on the people. Prices of goods that will pass the expressways will surely increase much farther. We, Bicolanos, buy products, goods, etc. from Metro Manila. We will also be affected.

I saw Henares say on TV that the government is exploring all means possible to raise revenues to cover the P325 million budget deficit. She emphasized that this is the law and they did not make the law. She also said that the BIR will also go after the owners of sari-sari stores, street corner barbecue-stands, ambulant vendors, jeepney drivers, tricycle drivers, etc. These are people who do not even make enough money to feed their family and still being made to pay taxes.

How pitiful are the people who President Noynoy Aquino called his boss during his inaugural speech with those taxes.

The Philippine Daily Inquirer dated July 23, 2010 reported the following: Senator Juan Ponce Enrile who is a tax expert says, “VAT on Express Toll is illegal.” At the Kapihan sa Senado, the senator said he would oppose the imposition of the Value Added Tax on the use of highways and expressways because these toll fees are users tax. That is not correct. That is not in the law, and concerned citizens can go to the courts and question the tax.

Enrile said expressways are not covered by VAT. He said public roads or highways do not belong to the concessionaires but to the government.

“Government asked somebody to construct the road for it and agreed that the concessionaires would charge a fee for the use of road subject to the regulation of the Toll Regulatory Board to pay back what the government would otherwise have advanced to construct it,” he said.

This is enlightening and is well said.

Herman Laurel Tiu wrote the following excerpt in the Daily Tribune dated July 19, 2010: “Mainstream media have followed up P-Noy Aquino’s  announcement of his Philippine Amusement and Gaming Corp. (PAGCORP) plan with massive propaganda. Their argument is that since any game of chance is immoral and unproductive, and since PAGCOR, the largest gambling operation run by the country is riddled with corruption, that state-owned enterprise needs to be privatized. However, if they truly believe gambling to be immoral and unproductive, shouldn’t they call for its abolition?

To call only for privatization contradicts  their sworn moral scruples and belies their position s hypocritical and insidious. As the privatization of PAGCORP means its gambling operation continues, the only change will be where the revenue will go.

From the initial information disclosed to media, the Privatized PAGCORP  envisioned by P-Noy will be tax-exempt. He can only roll our eyes in amazement at the unbelievable luck that the favored private party or parties will enjoy. PAGCORP’s income amounts to an average of P30 billion or over $600 million dollars every year, and that’s supposed to be a much needed resources for government to help the poor.”

I agree with Laurel Tiu’s opinion that PAGCORP’S income should go to the government and not to private party or parties thru privatization and should be used to help the poor.


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