GMA ready to sign bill on tax exemption for water districts

MANILA, Philippines - President Arroyo is ready to sign into law a bill that would allow local water districts all over the country to spend more on capital expenditure and expand their services by exempting them from income tax as the country grapples with the growing damage caused by the El Niño phenomenon.

Deputy presidential spokesman Gary Olivar said Mrs. Arroyo is giving the bill a final go-over and making consultations with stakeholders as well concerned agencies before signing it.

“It seems like a good bill on the face of it. She is studying it. We will have to look at funding requirements and how will it fit into the overall package of measures that we will do.  Hopefully, there will be no overlap or conflict,” Olivar said.

He was referring to Senate Bill 3392 and House Bill 5210 endorsed by Sen. Juan Miguel Zubiri and Local Water Utilities Administration (LWUA) chairman Prospero Pichay.

Olivar said Mrs. Arroyo is also getting inputs from the LWUA, Metropolitan Water and Sewerage System (MWSS), and the National Water Resources Board.

Zubiri earlier said Congress has put a safeguard on the tax savings wherein the amount that would have been paid as income tax and saved by the local water district by virtue of its exemption shall be used for capital development expenditure in order to expand water service coverage and provide safe and clean water in the provinces, cities and municipalities.

In his letter to the President, Pichay said LWUA, the national agency mandated by law to regulate local water districts, has endorsed the signing into law of the enrolled bill for the benefit of the Filipinos getting water through water districts.

Philippine Association of Water Districts president Delfin Hilario said there are 478 operational water districts in the country serving 15 million Filipinos.

He said, “The enactment of the bill would enable water districts to bring service to more waterless communities that are not yet reached by piped water, improve water quality, thus reducing water-borne diseases, and would help water districts sufficiently meet the effect of El Nino.”

Rodelio Dascil, director general of Senate Tax Study and Research Office, said Congress studied the bill carefully and adopted the strategy of exempting local water districts from income tax as “a response to the reality that water scarcity and misuse pose threats to sustainable development and the environment and that the passage of the bill would benefit millions of our people through better access to potable water.”

During a public hearing on the bill, the Department of Justice said that if the National Power Corp. and the MWSS are exempt from taxable income, it does not see any point in not exempting the local water districts.

In its legal opinion in Camarines Norte Water vs. BIR, there is no distinction whatsoever between the public utility, thus if and when the local water districts will not be exempt and other similarly situated are exempt, that would be discriminatory.