Opposition senators to file anti-VAT petition before SC

Seven senators belonging to the Senate minority bloc will file a petition before the Supreme Court today to declare President Arroyo’s authority to raise the value-added tax (VAT) rate as unconstitutional.

In a 28-page petition, Senators Aquilino Pimentel Jr., Sergio Osmeña III, Jamby Madrigal, Jinggoy Estrada, Panfilo Lacson, Alfredo Lim and Luisa Ejercito argued that "the power to tax is inherently legislative in character and as such should not be delegated unless expressly allowed by the Constitution."

Quoting Article 6, Section 28 of the Constitution, the senators pointed out that the power that may be delegated to the President only covers tariff rates, import and export quotas, tonnage and wharfage dues and other duties and imposts.

They noted, however, that the Constitution is silent on the authority of the President to increase the rates of internal revenue taxes, including the VAT.

Sen. Ralph Recto, principal sponsor of the VAT bill in the Senate, argued that they are not delegating the power to the President.

"We’re not delegating the power to adjust the VAT. It is automatic upon certain conditions. Certain conditions have been set. The law is complete in itself," he explained.

Under Republic Act 9337, which was approved by Mrs. Arroyo last May 24, the President is mandated to raise the VAT rate from 10 to 12 percent effective Jan. 1 next year if either of the following conditions are met: VAT collection as a percentage of gross domestic product of the previous year exceeds 2.8 percent, or the national government deficit as a percentage of GDP of the previous year exceeds 1.5 percent.

The VAT increase violates the Constitution since it imposes an unfair and additional burden on the people, the senators said.

Pimentel said they will ask for a temporary restraining order on the implementation of the bill which is set to commence on July 1.

If granted, this would disrupt the government’s revenue targets for this year. — Marvin Sy