VAT Now?
President Arroyo’s economic plans suffered a big setback with the decision of the Supreme Court to stop the implementation of her newest tax measure – the Expanded Value-Added Tax. In her State of the Nation Address last year, the President asked Congress to pass eight revenue measures, including the EVAT which will serve as the centerpiece of the revenue-generating measures. The EVAT was one of the three economic reform bills that was passed into law at the end of the 1st regular session of the Thirteenth Congress. The other two revenue-generating measures were the Sin Tax Law and the Attrition Act of 2005. The EVAT was calculated to haul in P160 million daily for the cash-strapped government and was widely believed to be the ultimate solution to wipe out the country’s budget deficit by 2008.
EVAT History
On 24 May, RA 9337 or the EVAT bill was signed into law. Three days later, the ABAKADA Guro Party List filed a petition with the Supreme Court for the prohibition of RA 9337’s implementation. It argued that the respondents, Executive Secretary Eduardo R. Ermita, Finance Secretary Cesar V. Purisima, and BIR Commissioner Guillermo L. Parayno, Jr. had no authority to enforce the law. They deemed it unconstitutional, as it violated Congress’ exclusive authority to fix tax rates.
Several days later on 9 June, seven senators led by Sen. Aquilino Q. Pimentel, Jr. asked the Supreme Court for a writ of certiorari to annul and set aside sections 4, 5, and 6 of RA 9337. The petition sought the immediate resolution of the issue questioning the President’s authority to increase VAT to 12% in 2006.
With some provisions of the law scheduled to take effect on 1 July, a third petition was filed with the high court on 29 June by oil dealers. Petitioners led by the Association of Pilipinas Shell Dealers, Petron Dealers Association, Association of Caltex Dealers of the Philippines, and other individual dealers sought RA 9337’s prohibition with a request for an issuance of a temporary restraining order (TRO) or writ of preliminary injunction. The oil dealers questioned the constitutionality of certain provisions of the law particularly Sections 110 (A) (2), 110 (B), and 114 (C) of the National Internal Revenue Code, as amended by RA 9337.
Finally, on the eve of the EVAT’s implementation, 17 members of the House of Representatives led by House Minority leader Francis G. Escudero filed yet another petition. They asked for the declaration of unconstitutionality of RA 9337, certiorari and prohibition with application for the issuance of a TRO or writ of preliminary injunction.
Responding to the four petitions, the Supreme Court, by a vote of 13-2 issued a TRO on 1 July just hours after the law took effect. Chief Justice Hilario G. Davide, Jr. and Associate Justice Reynato S. Puno, voted against its promulgation. Five Justices cast their votes from abroad. The Supreme Court required the respondents to comment on the petitions within 10 days. The hearing for oral arguments was set on 26 July.
|
