Press Release
October 2, 2007

ESCUDERO REJECTS COMMON CARRIER'S TAX

Opposition Senator Chiz Escudero today confronted the Bureau of Internal Revenue and the Department of Finance for imposing the common carriers tax on public transport sectors without going through the proper process and appropriate channels.

Escudero, Chairman of the Senate Committee on Ways and Means told the BIR and DOF upfront that both agencies, in issuing Revenue Regulation No. 9-2007 or the common carriers tax is in effect encroaching upon the prerogative of Congress and going beyond their delegated authorities pursuant to the National Revenue Code.

The regulation prescribes an increase of the monthly gross receipts of public transportations to two thousand six hundred percent (2600%).

In a public hearing conducted by the committee tackling Senate Resolution Numbers 58 and 74 (both calling for a review and inquiry on the legality of the common carrier's tax), Escudero reprimanded the BIR and DOF for issuing such directive saying they do not have the power and prerogative to update or increase the minimum quarterly/monthly taxable gross receipts of domestic carriers without going through Congress.

DOF and BIR used Sections 244 and 128 of the National Internal Revenue Code. However, Escudero said both agencies flawed in using such sections as basis for the regulation.

"Section 244 is just about issuance of general application in the exercise of the DOF's quasi-legislative function in accordance with the authority delegated to it by Congress and Section 128, on the other hand, refers to a mere administrative function of the BIR Commissioner that is meant to specifically apply only to particular cases that do not include revenue regulation.

Escudero bluntly told DOF and BIR that both agencies cannot get the support of Senate specifically of his Committee with any imposition of new taxes saying raising revenues should be achieved through proper implementation of the already existing taxes.

Escudero again told the BIR and DOF that they should abide by the principles of a sound tax system (based on Adam Smith's Canon's of Taxation) that "the tax system should be capable of being properly and efficiently administered by the government and enforced with the least inconvenience to the taxpayer."

"The additional tax burden to be imposed by the CCT will eventually hit the commuting public in the form of higher fares because transport operators will surely clamor for an increase in minimum fare." Escudero will submit a committee report to the plenary declaring the CCT illegal.

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