Local water districts now exempted from income tax

By BEN R. ROSARIO
March 16, 2010, 5:43pm
Local water districts are now exempted from payment of income taxes.

This, after the bill sparing them from paying income tax lapsed into law.

No reason was given by Malacañang for the lack of presidential action on the bill but water districts in the country
welcomed the development.

The enrolled Senate Bill 3392 and House Bill 5210 lapsed into law on March 11 and is now Republic Act  10026 or
the Law Exempting Water Districts from Income Tax.

Senator Juan Miguel Zubiri was the principal author of SB 3392, while the House version as authored by South
Cotabato Rep. Darlene Antonino-Custodio.

Earlier, various sectors urged President Gloria Macapagal-Arroyo to immediately sign the enrolled bill which aims
primarily to help local water districts in the country in providing quality potable water to the public, especially in the
rural areas.

In a speech before the 31st Annual Convention of the Philippine Association of Water Districts (PAWD), attended by
more than 1,000 general managers and board of directors of water districts nationwide, Sen. Miguel Zubiri said that
under the enrolled bill, the amount that would have been paid as income tax and saved by local water districts shall
be used for capital development expenditure in order to expand water services coverage and provide safe and clean
water in the provinces, cities, and municipalities.

In the same convention, LWUA Chairman Prospero A. Pichay said LWUA – the national agency mandated by laws to
regulate the local water districts – has endorsed the signing into law of the enrolled bill for the benefit of Filipinos
getting water through water districts.

In his letter of appeal to the President on behalf of 478 operational water districts serving 15 million Filipino, PAWD
president Delfin C. Hilario said the bill's enactment into law 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-born
diseases and would help water districts sufficiently meet the effect of El Niño.

During a public hearing on the bill, the Department of Justice (DoJ) said that if Napocor (National Power Corporation)
and MWSS (Metropolitan Waterworks and Sewerage System) are exempt from taxable income, DoJ do not see any
point in not exempting the local water districts.

In its opinion on the Camarines Norte Water vs BIR, the DoJ said there is no distinction whatsoever between the said
public utilities, thus if and when the local water districts will not be exempt and other similarly situated are exempted,
that will be discriminatory.

Meanwhile, Maynilad announced Tuesday a slight reduction in water bills in the wake of the peso appreciation
against foreign currencies.

The water concessionaire that services the West Zone said its customers consuming 30 cubic meters of water a
month will have tariff reduction equivalent to P0.39 in their monthly bills.

Earlier, in a board resolution of the Metropolitan Waterworks and Sewerage Systems (MWSS) dated March 10, the
water concessionaire was granted an average Foreign Currency Differential Adjustment (FCDA) of P0.10 per cubic
meter which is P0.01 per cubic meter lower than the previous quarter’s P0.11 average FCDA per cubic meter.

FCDA is a scheme granted to utility companies to allow them to recover losses or return gains from fluctuating value
of the Philippine peso against the dollar and other foreign currencies.

The West Zone portion covers the area of Manila (except San Andres and Sta. Ana), Quezon City (west of San Juan
River, West Avenue, EDSA, Congressional Avenue, Mindanao Avenue, and the northern part from Holy Spirit and
Batasan Hills), Makati (west of South Super Highway), Caloocan City, Pasay City, Paranaque City, Las Piñas City,
Muntinlupa City, Valenzuela City, Malabon City, Navotas, and the towns of Bacoor, Imus, Kawit, Noveleta, and
Rosario in Cavite. (With a report from Chito Chavez)