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Pass-on taxes unjust — MWSS

Not valid expense but  water agency helpless The Metropolitan Waterworks and Sewerage System said Thursday the act of the water firms passing on their taxes to consumers was “grossly unjust,” but doing away with it would still have to be determined by a process to be completed in July. “The view of the regulatory office is that with respect to the income tax of the concessionaires, this is not a valid expense that should be passed on to consumers,” acting chief regulator Emmanuel Caparas said. “Our opinion is that the method of charging the income taxes to consumers is something we do not agree with, and should not be done.” But Caparas said Maynilad Water Services Inc. and Manila Water Co. may not be held liable for their acts, and refunding the money for the charges that they passed on to consumers was not possible because this was not allowed in their concession agreements. “One of the possible options is an adjustment to lower their water rates,” Caparas said. He also said Maynilad and Manila Water would not be immediately ordered to stop making their consumers pay for their income taxes. “This is not automatic,” Caparas said. “This is going to be a long process that will be subject to analysis, and we want to finish it by July.” Various groups on Wednesday slammed Maynilad and Manila Water for allegedly passing on their income taxes, employee salaries and operating expenses to consumers worth billions of pesos. The Water for the People Network said Maynilad and Manila Water had passed on to consumers a total of P15 billion in the past five years, not to mention the billions more that they also passed on each time they lost as a result of foreign exchange fluctuations. The Water for All Refund Movement said the two concessionaires had also saved P7.2 billion so far from their tax exemptions. Bayan Muna Rep. Neri Colmenares said the water concessionaires should refund the billions they collected from the public for still unimplemented water projects. Senator Ralph Recto said he will file a resolution calling for a Senate inquiry into Maynilad and Manila Water, even as Reps. Luzviminda Ilagan and Emmi de Jesus denounced the concessionaires proposal to increase their water rates. Still, two groups—the Waterwatch Coalition Inc. and Alyansa ng Mamamayang Naghihirap Inc.—have asked the Supreme Court to stop the concessionaires from increasing their rates. The Manila Standard on Thursday tried to reach Maynilad and Manila Water for comment, but neither returned its call. Maynilad on Wednesday said the MWSS would be the appropriate entity to ask to explain because it was the government agency that crafted the 1997 concession providing for the recovery of business-related taxes by the concessionaires. The Water for the People Network on Thursday asked if the MWSS was doing its job as a regulator. “”What will it do now about the bloated cost of water and the fact that the consumers subsidize the operations and income taxes of these two private water concessionaires?” group convenor Sonny Africa said. “How would the MWSS right the wrong considering that this is viewed as grossly unjust and highly immoral?” With Christine F. Herrera
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