Press Release
August 6, 2007

Villar urges DOF to rethink plan increasing public utility vehicles tax

Senate President Manny Villar today warned government against the imposition of additional tax to operators of buses, jeepneys and taxis by 2,600 percent, saying the burden will eventually fall on commuters in the form of fare increases.

"We lament that the Department of Finance opted to implement this measure that will prove to be an additional burden to the commuting public. The DoF should reconsider and instead explore the possibility of hiking the "luxury tax" on sports utility vehicles before the common carriers tax on public utility vehicles," Villar said.

Villar added that public transport operators and drivers, who are already saddled by heavy taxes, will pass the weight of these additional charges to the commuters.

"The chauffeured class may have the capacity to pay higher taxes on what are basically luxury items, but paying additional tax is a luxury no jeepney driver can afford," he added.

Villar, also president of the Nacionalista Party, said jeepney drivers already pay a slew of taxes such as the Road Users Tax, which is tucked in on car registration fees, franchise fees, income tax by the operator, and the 12 percent VAT for every peso spent for diesel and oil.

"I disagree with the notion that jeepney drivers and operators do not contribute to the national tax effort. Jeepneys and taxis pay their tax several times a day at gas stations. These have become one of BIR's most efficient collection points," Villar pointed out.

"Instead of higher taxes on the poor man's ride, the DoF should look into the possibility of proposing a bill that would increase the excise tax on "high end" automobiles, such as SUVs and limousines," Villar said.

At present, the excise tax - which is on top of the 12-percent VAT - on motor vehicles is governed by Republic Act 9224, which became a law on Aug. 29, 2003.

Under the said law, a vehicle with a net manufacturer's or importer's selling price of P2.1 million pays an equivalent of about 25 percent in excise tax , or P512,000, which was lower than what the rate was under the old tax regime.

The "P2.1 million up" is the topmost bracket in the tax schedule provided under RA 9224. It likewise states that a tax of 60 percent shall be paid on the value in excess of P2.1 million.

Villar noted that the law has three other tax brackets, but the "feasibility study" on increasing the rate should be on the "topmost bracket because expensive cars fall under this area."

"Legislation may no longer be even needed, as RA 9224 grants the Secretary of Finance the power to "index," based on foreign exchange changes, the excise tax rate every two years. Has this been done?" Villar asked.

Villar issued this call following the issuance of BIR Revenue Regulation 9-2007 that would adjust the minimum monthly and quarterly gross receipts tax for common carriers and keepers of garages beginning August 18.

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