DOF backs tax on Meralco users

MANILA, Philippines – The Department of Finance (DOF) is backing the Bureau of Internal Revenue (BIR)’s plan to impose a 10 percent tax on customers of the Manila Electric Co. (Meralco) for the interests they earned from their electric meter deposits.

Saying that “any form of income is taxable,” Finance Undersecretary Gil Beltran contended that interests earned from electric meter deposits could be taxed.

The BIR is now working on the proposal and has drafted a regulation on the matter, an official said.

The move is part of the BIR’s efforts to step up revenues amid heavy pressure from Malacañang and the DOF to meet collection targets.

The BIR is tasked to collect P845 billion this year but the Development Budget Coordination Committee (DBCC) said the agency may end collections with only P810 billion due to the increase in tax exemptions as mandated by the Minimum Wage Law or Republic Act 9504 which took effect last July.

The proposal to tax the interests earned on consumer’s electric meter deposits, came up during the administration of former BIR commissioner Lilian Hefti who resigned last October.

Tax lawyer and accountant Sixto Esquivias IV took over the BIR’s helm.

Under the proposal, Meralco will withhold the 10 percent tax, remit this to the BIR, and later charge it to the consumer.

Last June, the Energy Regulatory Commission (ERC) ordered distribution utilities like Meralco to refund with interest their customers’ deposits for electric meters.

In its decision, the power regulatory commission ordered Meralco and other distribution utilities to start the refund not later than six months from its effectivity or within two years in the case of non-stock and non-profit electric cooperatives, or ECs.

Meralco officials said the refund is estimated to reach P2.8 billion, of which P1.5 billion comprises the principal amount and P1.3 billion as the interest.

The Lopez-controlled power utility firm had said that it was looking at a five-year period to implement the refund.

Of the proposed five-year plan, three years will be devoted for the refund of residential customers, now numbering about 1.8 million.

The ERC’s refund order is part of the implementation of the Magna Carta for Residential Electricity Consumers.

Meralco started collecting meter deposits in 1987 to ensure that customers are protected from loss or damage of the electrical meter installed in their homes.

However, the collection stopped in 2004 when the regulator issued the Magna Carta for Residential Electricity Consumers.

The BIR collected P55.8 billion in September, up 14 percent from P48.9 billion recorded a year ago, latest data from the finance department showed.

This brought the January to September BIR collections to P587.9 billion or 18.9 percent below the program for the period of P606.8 billion, data showed.

However, the nine-month collections were 12.6 percent higher than the P521.9 billion collected by the BIR in the same period last year.