Debate on LGU power to tax continues in Quezon
LUCENA CITY—A Quezon official urged the provincial government to demand from the operator of the 735-megawatt coal-fired thermal power plant in Pagbilao town the payment of P944 million in real property tax.
Provincial Board Member Ferdinand Talabong, in a privilege speech on Monday, said he feared that President Aquino would again condone the tax liabilities of the plant operator Team Energy (TE), just like what the President did in 2011.
But the TE management continued to insist that the tax collection effort should be addressed to National Power Corp. (Napocor) and not to the plant operator.
“It is very clear in our Energy Conversion Agreement, which is our master contract with the government, that RPT (real property tax) payments are to the account of the national government,” said Greggy Romualdez, head of TE’s external affairs, in a statement sent to the Inquirer on March 21.
TE is a joint venture of Japanese firms Tokyo Electric Power Co. and Marubeni Corp. The company operates the Pagbilao plant and other generating facilities acquired from
US-based Mirant Corp. in 2007.
The plant is located in a 200-hectare compound on Isla Grande in Barangay Ibabang Polo in Pagbilao.
Romualdez said the issue of real property tax payments was a matter between the national government and the provincial government of Quezon.
But he said that “while RPT payments are not Team Energy’s obligation, we are willing to advance the payments on behalf of PSALM (Power Sector Assets and Liabilities Management) should they request us to do so.”
Talabong said that under the new tax law, any question on tax liability should be addressed to the Court of Tax Appeals or the Supreme Court.
The law, he believed, is “favorable” to the local government, citing a Supreme Court decision in January 2010 that ruled in favor of the collection of taxes by the Quezon and Pagbilao governments.
Talabong claimed that the TE Pagbilao plant was earning P100 million a day from its operations and thus, what it owed the provincial government was just a chunk of its profits.
Talabong based his tax figure, P944 million, on the demand letter sent by the Pagbilao municipal treasurer to TE.
Romualdez said the company had received the assessment sent by the Pagbilao government and forwarded it to Napocor and PSALM and was waiting for instructions from the two agencies on the matter.
“Rest assured, we are a responsible corporate entity that settles all our rightful tax obligations on time and in full. We deeply value our relationships with the leaders of Quezon province and the municipality of Pagbilao. We continue to work with them in our efforts to uplift the lives of people in and around our host community,” Romualdez said.
The province has tried but failed to collect P6.1 billion in back taxes from TE despite a favorable Supreme Court decision.
Mr. Aquino issued Executive Order No. 27 in February 2012 that stopped the provincial government from collecting the unpaid real property taxes.
Mr. Aquino said he could not allow local governments to collect back taxes from independent power producers because it would “threaten the financial stability of the government and the stability of energy prices.”
The President said forcible collection of taxes by the local government could also increase power costs.
