Post by grifter on Oct 19, 2005 9:35:26 GMT 7
Tax takes effect on Nov. 1, says DoF
MORE THAN TWO months after it froze the 10-percent expanded value-added tax law, the Supreme Court yesterday denied "with finality" all five motions for reconsideration of the administration's centerpiece tax reform program, paving the way for its implementation.
"The law is supposed to take effect immediately. There is no second motion (for reconsideration) to be allowed," said Ismael Khan Jr., head of the Supreme Court Public Information Office, following the issuance of the order at 4:30 p.m.
But Assistant Finance Undersecretary Emmanuel Bonoan said the VAT law, or Republic Act No. 9337, would take effect on Nov. 1 after the Department of Finance (DoF) shall have published the "revenue regulation."
Implementation of the law will further jack up the prices of petroleum products and electricity and other goods and services at a time when Filipino consumers are struggling to cope with record fuel prices.
The VAT law allows the President to raise the tax rate
to 12 percent in January next year from the existing 10 percent. It also increases the corporate income tax from 32 percent to 35 percent for three years.
Exemptions lifted
Other previously VAT-exempt products and services now covered by the tax include coal, natural gas and other indigenous fuels; electric cooperatives; highway toll fees; domestic air and sea transport; medical and legal services; cotton, cotton seeds and non-food agricultural products; and works of art, literary works and musical compositions.
Malacañang welcomed the Supreme Court decision.
Finance Secretary Margarito "Gary" Teves said the expected additional revenues from the VAT law would help the government put its fiscal house in order and promote a better economic environment.
Executive Secretary Eduardo Ermita said Malacañang would implement the tax measure as soon as possible even in the face of the lingering political crisis. The government wants the tax measure in place preferably before the year ends.
Expect more rallies
"We are preparing for more rallies, especially with the implementation of the VAT. We're confident that with proper information dissemination, the public will come to understand the need to raise taxes," Ermita said.
He appealed to the government's critics to give the new tax a chance. "Medicines are normally not always sweet, just like VAT," Ermita said.
The opposition slammed the VAT law. "This is a sad day for Filipinos. There will be a marriage of two crises -- the political and economic," Iloilo Representative Rolex Suplico said.
"This is a deadly combination," said Suplico, one of two members of the House minority who filed a bill seeking to repeal the VAT law.
House Minority Leader Francis Escudero, one of those who sought an injunction against the tax measure in the Supreme Court, said an added tax burden was the last thing Filipinos needed during these times when oil prices were at an all-time high and workers' minimum wages had yet to be increased substantially.
"This is only highlighting the insensitivity of the government," he said.
Salary increase
But the chair of the House committee on appropriations said the new law would generate the needed revenues for the administration's budget for 2006.
"Its implementation will be the backbone of the P1-trillion 2006 budget. This includes the P15-billion allocation for salary increases of government employees," said Camarines Sur Representative Rolando Andaya Jr.
National Treasurer Omar Cruz said borrowing costs for the national government, along with those of consumers, would likely fall despite VAT-induced price increases.
"This means that the government will have healthier finances, which will translate to lower borrowing costs for us," he said.
Half solved
The Makati Business Club (MBC) said the country's fiscal crisis remained only "half solved," stressing that it could only be finally put to rest when the new taxes had been "well spent."
"The VAT law only addresses the revenue side," MBC executive director Guillermo Luz said in an interview. "The long-term benefits of this law will be determined by how the money is spent."
The MBC, the umbrella organization of the country's biggest business interests, has called on Ms Arroyo to resign in the wake of poll fraud allegations against her.
Another large business organization echoed MBC's stand on the controversial law, while urging its member firms to undertake "mitigating measures" to minimize the impact of the new tax on consumer prices.
"We need the VAT law for the economy to improve," said Donald Dee, president of the Philippine Chamber of Commerce and Industry. The group is composed mainly of small- and medium-sized businesses, most of which have little recourse but to pass the higher taxes onto consumers.
July 1 freeze order
The Supreme Court froze the tax measure on July 1, hours after it came into force, as the justices weighed a series of legal motions filed by opponents of the VAT law.
Groups opposed to the measure filed another challenge with the court after its Sept. 1 decision that said the VAT law was constitutional.
Arroyo's standby authority
Those who questioned the constitutionality of the tax law were Senate Minority Leader Aquilino Pimentel Jr. and Escudero, petroleum dealers, the Abakada Guro party-list group and Bataan Gov. Enrique T. Garcia.
The opposition lawmakers said the standby authority of the President under the VAT law was unconstitutional because it constituted undue delegation of legislative authority.
Unsigned ruling
The dealers had asked the tribunal to declare unconstitutional some of the provisions of the VAT law, including the 70-percent cap on the creditable input VAT, the 60-month amortization of input VAT on goods costing more than P1 million, and the 5-percent final withholding VAT on gross payments by government agencies on their purchases.
Asked how the justices voted, Khan said it was safe to assume that the majority voted to dismiss the motions for reconsideration because the resolution was "unsigned."
Dissenting opinions
Of the 15 justices, only Associate Justices Dante Tinga and Consuelo Ynares-Santiago filed their respective dissenting opinions to the resolution.
Khan said there were 11 dissenting opinions on some of the provisions of the tax law, but the objections did not muster the eight votes needed for any provision to be stricken down as unconstitutional.
On the argument of the petitioners that granting the President the power to raise the tax rate from 10 percent to 12 percent starting Jan. 1 constituted "undue delegation of legislative authority," the court said: "There is no merit in this contention."
The Supreme Court noted that the "the secretary of finance is not acting as an alter ego of the President or even her subordinate" in making the recommendation to increase taxes on certain conditions.
"He is acting as an agent of the legislative department, to determine and declare the event upon which its expressed will is to take effect. The (DoF) secretary becomes the means or tools by which legislative policy is determined and implemented," the court said.
No undue delegation
With this provision, the court said, "Congress does not abdicate its functions or unduly delegate power when it describes what job must be done, who must do it and what is the scope of authority..."
"There is no undue delegation of legislative power but only of the discretion as to the execution of the law. This is constitutionally permissible. Congress does not delegate the power to tax but the mere implementation of the law," the court said.
Under the law, the President can exercise the standby power only when VAT collection as a percentage of gross domestic product (GDP) of the previous year exceeds 2.8 percent and when the deficit as a percentage of GDP of the previous year exceeds 1.5 percent.
On the petition of Garcia that the additional tax burden on consumers would make the tax law "unconstitutional for being arbitrary, oppressive and inequitable," the court said that although it recognizes the added burden to consumers, it "cannot strike down the law as unconstitutional simply because of its yokes."
"The legislature has spoken and the only role that the court plays in the picture is to determine whether the law was passed with due regard to the mandates of the Constitution. Inasmuch as the court finds that there are no constitutional infirmities with its passage, the validity of the law must therefore be upheld," the tribunal said.
Glitch
On the argument of petroleum dealers that the implementation of the VAT law could result in their closure, the court said the "glitch" in their argument was that the losses they presented to the court were "based on an event that is yet to happen."
How the law would affect an entrepreneur would depend on how "one manages and operates its business," the Supreme Court said.
"Market forces, strategy and acumen dictate their moves. With or without these VAT provisions, an entrepreneur who does not have the ken to adapt to economic variables will surely perish in the competition," the court said.
With these arguments, the court said, "the motions for reconsideration are hereby denied with finality. The temporary restraining order issued by the court is lifted."
Deferment
Ermita said the government had no plans to defer expansion of the VAT on power and fuel as suggested by some sectors to lessen the burden on consumers.
But should Congress vote to amend the VAT law and temporarily exempt power and fuel from the tax, Ermita said Malacañang would have no choice but to comply.
"The executive branch has always been of the position that we should first implement laws that have been approved by law before we postpone it,"
*courtesy of INQ7.net
MORE THAN TWO months after it froze the 10-percent expanded value-added tax law, the Supreme Court yesterday denied "with finality" all five motions for reconsideration of the administration's centerpiece tax reform program, paving the way for its implementation.
"The law is supposed to take effect immediately. There is no second motion (for reconsideration) to be allowed," said Ismael Khan Jr., head of the Supreme Court Public Information Office, following the issuance of the order at 4:30 p.m.
But Assistant Finance Undersecretary Emmanuel Bonoan said the VAT law, or Republic Act No. 9337, would take effect on Nov. 1 after the Department of Finance (DoF) shall have published the "revenue regulation."
Implementation of the law will further jack up the prices of petroleum products and electricity and other goods and services at a time when Filipino consumers are struggling to cope with record fuel prices.
The VAT law allows the President to raise the tax rate
to 12 percent in January next year from the existing 10 percent. It also increases the corporate income tax from 32 percent to 35 percent for three years.
Exemptions lifted
Other previously VAT-exempt products and services now covered by the tax include coal, natural gas and other indigenous fuels; electric cooperatives; highway toll fees; domestic air and sea transport; medical and legal services; cotton, cotton seeds and non-food agricultural products; and works of art, literary works and musical compositions.
Malacañang welcomed the Supreme Court decision.
Finance Secretary Margarito "Gary" Teves said the expected additional revenues from the VAT law would help the government put its fiscal house in order and promote a better economic environment.
Executive Secretary Eduardo Ermita said Malacañang would implement the tax measure as soon as possible even in the face of the lingering political crisis. The government wants the tax measure in place preferably before the year ends.
Expect more rallies
"We are preparing for more rallies, especially with the implementation of the VAT. We're confident that with proper information dissemination, the public will come to understand the need to raise taxes," Ermita said.
He appealed to the government's critics to give the new tax a chance. "Medicines are normally not always sweet, just like VAT," Ermita said.
The opposition slammed the VAT law. "This is a sad day for Filipinos. There will be a marriage of two crises -- the political and economic," Iloilo Representative Rolex Suplico said.
"This is a deadly combination," said Suplico, one of two members of the House minority who filed a bill seeking to repeal the VAT law.
House Minority Leader Francis Escudero, one of those who sought an injunction against the tax measure in the Supreme Court, said an added tax burden was the last thing Filipinos needed during these times when oil prices were at an all-time high and workers' minimum wages had yet to be increased substantially.
"This is only highlighting the insensitivity of the government," he said.
Salary increase
But the chair of the House committee on appropriations said the new law would generate the needed revenues for the administration's budget for 2006.
"Its implementation will be the backbone of the P1-trillion 2006 budget. This includes the P15-billion allocation for salary increases of government employees," said Camarines Sur Representative Rolando Andaya Jr.
National Treasurer Omar Cruz said borrowing costs for the national government, along with those of consumers, would likely fall despite VAT-induced price increases.
"This means that the government will have healthier finances, which will translate to lower borrowing costs for us," he said.
Half solved
The Makati Business Club (MBC) said the country's fiscal crisis remained only "half solved," stressing that it could only be finally put to rest when the new taxes had been "well spent."
"The VAT law only addresses the revenue side," MBC executive director Guillermo Luz said in an interview. "The long-term benefits of this law will be determined by how the money is spent."
The MBC, the umbrella organization of the country's biggest business interests, has called on Ms Arroyo to resign in the wake of poll fraud allegations against her.
Another large business organization echoed MBC's stand on the controversial law, while urging its member firms to undertake "mitigating measures" to minimize the impact of the new tax on consumer prices.
"We need the VAT law for the economy to improve," said Donald Dee, president of the Philippine Chamber of Commerce and Industry. The group is composed mainly of small- and medium-sized businesses, most of which have little recourse but to pass the higher taxes onto consumers.
July 1 freeze order
The Supreme Court froze the tax measure on July 1, hours after it came into force, as the justices weighed a series of legal motions filed by opponents of the VAT law.
Groups opposed to the measure filed another challenge with the court after its Sept. 1 decision that said the VAT law was constitutional.
Arroyo's standby authority
Those who questioned the constitutionality of the tax law were Senate Minority Leader Aquilino Pimentel Jr. and Escudero, petroleum dealers, the Abakada Guro party-list group and Bataan Gov. Enrique T. Garcia.
The opposition lawmakers said the standby authority of the President under the VAT law was unconstitutional because it constituted undue delegation of legislative authority.
Unsigned ruling
The dealers had asked the tribunal to declare unconstitutional some of the provisions of the VAT law, including the 70-percent cap on the creditable input VAT, the 60-month amortization of input VAT on goods costing more than P1 million, and the 5-percent final withholding VAT on gross payments by government agencies on their purchases.
Asked how the justices voted, Khan said it was safe to assume that the majority voted to dismiss the motions for reconsideration because the resolution was "unsigned."
Dissenting opinions
Of the 15 justices, only Associate Justices Dante Tinga and Consuelo Ynares-Santiago filed their respective dissenting opinions to the resolution.
Khan said there were 11 dissenting opinions on some of the provisions of the tax law, but the objections did not muster the eight votes needed for any provision to be stricken down as unconstitutional.
On the argument of the petitioners that granting the President the power to raise the tax rate from 10 percent to 12 percent starting Jan. 1 constituted "undue delegation of legislative authority," the court said: "There is no merit in this contention."
The Supreme Court noted that the "the secretary of finance is not acting as an alter ego of the President or even her subordinate" in making the recommendation to increase taxes on certain conditions.
"He is acting as an agent of the legislative department, to determine and declare the event upon which its expressed will is to take effect. The (DoF) secretary becomes the means or tools by which legislative policy is determined and implemented," the court said.
No undue delegation
With this provision, the court said, "Congress does not abdicate its functions or unduly delegate power when it describes what job must be done, who must do it and what is the scope of authority..."
"There is no undue delegation of legislative power but only of the discretion as to the execution of the law. This is constitutionally permissible. Congress does not delegate the power to tax but the mere implementation of the law," the court said.
Under the law, the President can exercise the standby power only when VAT collection as a percentage of gross domestic product (GDP) of the previous year exceeds 2.8 percent and when the deficit as a percentage of GDP of the previous year exceeds 1.5 percent.
On the petition of Garcia that the additional tax burden on consumers would make the tax law "unconstitutional for being arbitrary, oppressive and inequitable," the court said that although it recognizes the added burden to consumers, it "cannot strike down the law as unconstitutional simply because of its yokes."
"The legislature has spoken and the only role that the court plays in the picture is to determine whether the law was passed with due regard to the mandates of the Constitution. Inasmuch as the court finds that there are no constitutional infirmities with its passage, the validity of the law must therefore be upheld," the tribunal said.
Glitch
On the argument of petroleum dealers that the implementation of the VAT law could result in their closure, the court said the "glitch" in their argument was that the losses they presented to the court were "based on an event that is yet to happen."
How the law would affect an entrepreneur would depend on how "one manages and operates its business," the Supreme Court said.
"Market forces, strategy and acumen dictate their moves. With or without these VAT provisions, an entrepreneur who does not have the ken to adapt to economic variables will surely perish in the competition," the court said.
With these arguments, the court said, "the motions for reconsideration are hereby denied with finality. The temporary restraining order issued by the court is lifted."
Deferment
Ermita said the government had no plans to defer expansion of the VAT on power and fuel as suggested by some sectors to lessen the burden on consumers.
But should Congress vote to amend the VAT law and temporarily exempt power and fuel from the tax, Ermita said Malacañang would have no choice but to comply.
"The executive branch has always been of the position that we should first implement laws that have been approved by law before we postpone it,"
*courtesy of INQ7.net
