Reps. Michael Angelo Rivera and Salvador Cabaluna III (Party-list, 1 Care) filed House Bill 4514 seeking to impose a uniform franchise tax on distribution utilities enjoying legislative franchise, in lieu of any and all taxes collected by the government to reduce the cost of electricity borne by consumers .
Rivera said prior to the enactment of Republic Act 9337 otherwise known as the E-VAT, which further amended the National Internal Revenue Code (NIRC), electric, gas and water utilities were subjected to a franchise tax at the rate of two percent on gross receipts under Section 119 of the NIRC.
The amendments embodied in RA 9337 freed the electric utilities from the franchise tax regime and subjected them to the 12 percent VAT.
Rivera said the present system where the power industry players are required to pay ordinary income tax and the 12 percent value added tax (VAT) has placed consumers at a disadvantage as the energy companies simply passed on them the cost of paying said taxes.
"The continuing increase in the cost of electricity contradicts the objective of Republic Act 9136 or the Electric Power Industry Reform Act (EPIRA) to establish a more competitive and responsive electricity deemed to provide better services to the public at affordable and competitive prices," Rivera said.
Cabaluna said it is the declared policy of the State to promote the public interest by ensuring the affordability and steady supply of electricity to the end-users.
Under the bill, Cabaluna said the distribution utility shall pay a franchise tax equivalent to three percent of its Gross Distribution Revenue derived from the distribution business granted under the distribution utility's legislative franchise.
The franchise tax shall be in lieu of all taxes, such as income tax, duties, fees, and charges of any kind, nature or description levied, established or collected by any government authority whatsoever, whether local or national, on its franchise, rights, privileges, receipts, wheeling charges, revenues and profits and upon its machineries, equipment, supplies, meters, poles, wires, transformers, insulators, capacitors, transportation equipment, substations, facilities, and all other real and personal properties actually used or intended for use by the distribution utility to provide electric distribution services to the consumers.
The bill provides that the distribution utility grantee, its successor or assigns, shall be liable to pay the same taxes on its real estate, buildings and other real property not actually used nor intended to provide electric distribution services under its franchise, as other persons or corporations are now or hereafter required by law to pay.
Under the bill, Gross Distribution Revenue shall mean gross receipts derived by a distribution utility from all its revenues, excluding all transmission and generation charges on the distributed electricity which are passed on to the consumers and all universal charges imposed under RA 9136 and all other charges to be passed on to the consumers as determined and approved by the Energy Regulatory Commission.
Likewise, the bill provides a percentage share from the three percent franchise tax levied on the distribution utilities shall be allocated by the national government to the local government units in accordance with the Implementing Rules and Regulations approved by the President of the Philippines. The IRR shall be promulgated by the Department of Finance, in consultation with the LGUs, within one year from the effectivity of the Act.
Earlier, Reps. Rufus Rodriguez (2nd District, Cagayan de Oro City) and Maximo Rodriguez (Party-list, Abante Mindanao) filed House Bill 4436, and Rep. Janette Garin (1st District, Iloilo) authored HB 4470, both measures seeking to revert to the previous system where franchise tax is being required of distribution utilities.
Source: http://www.congress.gov.ph
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