Sec. Purisima looks at new nontax revenues to raise more funds

As the value-added tax (VAT) on road toll has been put on hold by the Supreme Court—and since the court could make this temporary restraining order against “a tax [the VAT] on a tax [the toll]” permanent—the Department of Finance (DOF) is looking for other means of raising additional revenues through the government’s other line agencies.

On the sidelines of the Philippine Chamber of Commerce and Industry business meeting late Wednesday, Finance Secretary Cesar Purisima told reporters that the government is now looking at other means of generating more funds as alternatives to imposing taxes.

The Bureau of Internal Revenue (BIR), which contributes about two-thirds of all the government’s total revenues, has been banking on the 12-percent VAT on tolls to be collected from expressway operators to add P1 billion to the national coffers annually.

But on August 13, the Supreme Court issued a restraining order against the move, which kept the government from collecting the said tax starting August 16. The High Court gave the BIR 10 days to defend the toll VAT collection.

Given this, the Finance department is now looking at nontax revenues to augment the government’s yearly budget. Purisima said other agencies like the Department of Transportation and Communications (DOTC) and the Department of Environment and Natural Resources (DENR) to generate cash through the auction of frequencies and mining rights, respectively.

“But I cannot give you the exact things [we might implement] because we are still conducting the review on non-tax revenues,” Purisima said.

The DOTC does not normally auction frequencies to telecommunications firms, but the department was supposed to hold the bidding for the last third generation (3G) cellular frequency in 2009. The Court of Appeals, however, issued a temporary restraining order on the auction upon the petition of Bayan Telecommunications Inc.

The other frequencies that the government can auction off to private companies are broadband, radio and television broadcast.

Mining rights are also not secured by companies through bidding. The firms that want to secure rights to mine a certain area just pay application and other fees to the Environment department.

“I’ve sent requests to all departments to review all their fees and the way they do things . . . We’re looking at all potentials across the board,” the Finance chief told a group of businessmen on Wednesday in an economic briefing.

“We’re also working with the DILG [Department of Interior and Local Government]. Right now, most of the local governments are dependent on their local revenue allotment. They depend on it up to 85 percent of their budget. There should not be reason for that because they have their own taxing power, particularly real estate taxes,” he added.

Purisima said the DOF and the DILG are now working together in threshing out the standard to be adopted in taxing real estate. The BIR has its own Zonal Valuation and the Finance official said that this method can be adopted by the local governments for property taxes.

“So that they can increase the portion that real estate taxes contribute to their own budget. That way, with the same amount of money, we can get things done. Then our liability management effort hopefully will allow us to reduce the amount of money allocated to interest amortization in the budget. That’s something we want to aggressively do,” he said.

Despite the setback in the implementation of VAT on road fees, Purisima said the government would still pursue this case as it would have an impact on future projects that it would undertake.

“I believe that this is an important case because as we push PPP [public-private partnerships], these issues must be resolved,” he said. –LIKHA CUEVAS-MIEL, Manila Times