"I call on the Executive to reconsider the benefits given to these power producers."
"I call on the Executive to reconsider the benefits given to these power producers."
In the past few months, the existing water concessionaires supplying Metro Manila have been under the spotlight for their failure in ensuring adequate water supply. The President has repeatedly expressed his dismay over these companies and his stance against oligarchs who have been in control of public utilities for so long a time.
Like our problematic situation with water, electricity is another important public utility that requires careful scrutiny, with an eye to public convenience and the general welfare. Foreign control over our power industry casts doubt on the constitutional fidelity mandating nationalization of industries that are imbued with public interest.
Another thorny issue, Independent Power Producers (IPPs) under Build-Operate-Transfer (BOT) contracts with government-owned and controlled corporations (GOCCs), benefit from the reduction of real property taxes (RPTs) and condonation of interests. I saw this during the previous administration when former President Benigno Aquino III issued Executive Order (EO) No. 27 in 2011 and EO No. 173 in 2014. The two EOs provide for reduction and condonation of real property taxes and interest/penalties assessed on the power generation facilities of the said power producers. Under the Local Government Code, only GOCCs engaged in the production and transmission of power enjoy such exemptions/privileges with respect to real property taxes. However, the EOs have broadened their coverage to include independent power producers, to the prejudice of affected local government units.
What does this imply? Let us recall that real property tax is one of the sources of revenue by local governments. Through the collection of taxes, local government units are able to operate and fulfill their mandate to serve the public and make available and accessible goods and services needed by the people under their jurisdiction. The taxes are used to fund local programs such as, but not limited to, livelihood and agricultural projects, educational projects, scholarship grants, health care benefits, maintenance of peace and order, and construction and repair of local roads and bridges.
Power generating companies situated in provinces, such as Quezon, occupy a vast amount of land and utilize various machineries for its operations. The reduction and/or condonation of real property taxes result in significant revenue losses for the local government units, which ultimately affect and delay the delivery of essential public goods and services.
Under EO 27 which covered the taxable period of 1997 to 2011, the amount which Quezon province could have collected reached P6.4 billion. The actual amount collected only reached P678 million. EO 173 reduced/condoned RPTs from 2012 to 2014; the amount of uncollected taxes that could have been used for public goods and services reached P1.2 billion, while actual collection was only P107 million or less than 10 percent of the tax condoned. Thereafter, three EOs were passed with the same effect. EO 19, promulgated in 2017 and reduced taxes for 2015 to 2016, produced revenue loss of more than P678 million. EO 60, effective in 2018 and covered taxable year 2017, led to a P312-million loss of revenue to the local government, with only P31.6 million collected. The most recent, EO 88, approved in August 2019, condoning taxes for 2018, only generated P30.57-million revenue, P317.3 million condoned. It is undeniable that amounts from the continuous revenue loss are significant and could have produced networks of well-paved roads, hundreds of classrooms, thousands of scholars, quality medical equipment and facilities, and even greater medical assistance in hospitals.
Since the leadership of former Governor David Suarez, big power companies have been included in the list of entities exempted from paying real property tax. It is incredibly unfair that as we exert effort to protect and maintain balance in the environment and care for the welfare of the people on the grassroots level, these companies do not pitch in to the province’s means of doing so.
Hence, I call on the Executive to reconsider the benefits given to these power producers. Undeniably, the amounts could have augmented the budget of local government units in its provision of basic goods and services. Of course, consideration may be given to those independent power producers who are at the risk of shutting down operations or operating at a loss, or to small power companies relying on such benefits to be able to operate. What we intend to prevent are the unreasonable advantages given to those big companies pursuant to the said EOs. This year, I hope that we require these companies to pay their fair share to the local governments.