The Senate on Monday approved on third and final reading a bill removing the conditions for the condonation of unpaid taxes due from local water districts (LWDs).
Sen. Sonny Angara, chair of the Senate committee on ways and means, said the approval of Senate Bill No. 2518 would facilitate the growth and expansion of LWDs.
Angara said LWDs were created when Presidential Decree No. 18 known as the “Provincial Water Utilities Act of 1973” was enacted into law on May 25, 1973 to ensure that Filipinos in the countryside had access to safe and potable water. To date, he said, the country has a total of 514 local water districts, serving 19 million residents across the country.
“The unique role of water districts has long been recognized by Congress. From being classified as quasi-corporations, local water districts are now considered as government-owned and -controlled corporations (GOCCs),” Angara said when he sponsored the bill on the floor.
Like any other public utilities of similar nature such as the Metropolitan Waterworks and Sewerage System (MWSS) and the National Power Corporation (Napocor), the senator said, LWDs were exempted from paying taxes as provided for under Republic Act No. 1002 known as “An Act Granting Income Tax Exemptions to Local Water Districts.”
He said the law did not merely provide an income tax exemption but also for the condonation of all unpaid income taxes of water districts from Aug. 13, 1996 up to the effectivity of this law subject to certain conditions:
First, that the Bureau of Internal Revenue (BIR) establishes the financial incapacity of the concerned local water district to meet such obligations for the period stated therein; and
Second, that the water district availing of such condonation shall submit to congress a program of internal reforms.
“It is most unfortunate that the noble intention of RA 10026 is being defeated by the non-issuance of the requisite revenue regulations by the Bureau of Internal Revenue (BIR). Even though the law was passed in March 2010, or almost five years ago, the BIR has yet to issue the revenue regulations to implement RA 10026,” Angara said.
Instead of issuing the required revenue regulations, he said, the BIR issued Revenue Memorandum Circular (RMC) 68-2012, which outlined the procedure, and the documentary requirements for the application for condonation.
Angara also noted that even though concerned water districts diligently complied with the circular, the committee found that not a single application for condonation of the 78 LWDs amounting to around P842 million of unpaid taxes has been acted upon by the BIR due to the absence of a revenue regulation.
“The main intent of the proposed measure in removing the condonation requirements is to help water districts consolidate their scarce resources and channel them into capital development, expansion of water coverage, and provision of high quality yet affordable potable water,” he said.
“This automatic condonation will benefit not only those who are unable to pay said tax liabilities, but all local water districts since the legislative intent behind the enactment of RA 10026 will finally be given due course,” Angara added,
Senate President Franklin Drilon and Senate President Pro-Tempore Ralph Recto, both authors of the bill, also lauded its passage at the upper chamber.
Drilon said the bill primarily intends “to help local water districts reach and provide service to more and more Filipinos around the country, by unburdening them of needlessly laborious bureaucratic requirements.”
For his part, Recto called the proposed measure “an excellent piece of legislation, because taxes foregone will be returned to consumers, by making services better, broader and bigger.”
The foregone taxes, he said, could also be used to “finance improvements, like new wells and fresh sources, new pipes and modern meters to end leaks, and even computers to plug leakages of the monetary kind.” AU