Group hits water firms for passing income tax to consumers
June 26, 2013 | 9:10am
MANILA, Philippines - Militant group Bayan on Wednesday scored private water concessionaires Manila Water and Maynilad for passing on their income taxes to consumers by embedding these in their tariffs.
The Metropolitan Waterworks and Sewerage System has admitted the practice of passing on income tax to consumers, saying it is one of the issues being tackled in the ongoing rate-rebasing process.
Manila Water is seeking a P5.83/cubic meter increase while Maynilad is seeking an P8.58/cubic meter adjustment.
"Income tax should be the burden of the private concessionaires who profited from the operations of the water services...That is patently unjust and abusive. That past government regulators allowed such a practice is truly condemnable," Bayan secretary general Renato Reyes Jr. said.
"It now appears that the private concessionaires owe us lower water rates. A refund, not a rate hike, may be in order," he added.
He also cited computations by the Water for the People Network , a non-government organization opposing the impending water rate hike, which estimates total income tax passed on to consumers to amount to P15.5 billion from 2008 to 2012.
Reyes said that in the case of electric power distributor Meralco, the Supreme Court in 2003 ordered the power distributor to refund as much as P28 billion to its consumers.
He said that the practice of corporations of passing on their taxes to consumers is "reprehensible."
"Legally and politically, this unjust burden will be difficult to justify. The current regulators should stop this practice now. They must study the option of refunding the amount to the consumers.
"The overcharging underscores the inherent problems of privatization of water and the MWSS concession agreement. The private corporations want to recover all their expenses including income tax from the consumers. They are trying to maximize their profits while the consumers suffer the burden," Reyes said.
The Water for the People Network will hold a public consultation on June 29 at the University of the Philippines College of Law which homeowners, business groups and other interested parties are expected to attend.
The MWSS Regulatory Office has also been invited by the organizers. A sign-up drive against the rate hike has been circulating in communities.
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