Lacson Bill Exempts Local Water Districts from Tax

Instead of paying millions of pesos a year in income taxes, local water districts (LWDs) may soon be allowed to use the amount to improve their services. 

On this note, Sen. Panfilo M. Lacson filed Senate Bill 3152 seeking to exempt LWDs from paying such taxes so they can ensure clean water supply and effective wastewater disposal.

“As early as 1973, the government recognized the need for reliable and economically viable and sound water supply and wastewater disposal system for population centers of the Philippines,” Lacson noted in his bill.

Lacson’s bill seeks to amend Section 27 of the National Internal Revenue Code and make it consistent with the spirit of Presidential Decree No. 198, which institutionalized the LWDs.

PD 198 had exempted LWDs from paying income taxes as well as from the payment of all National Government, local government and municipal taxes and fees, and all duties or imposts on imported machinery, equipment and materials required for the operations.

But Lacson noted that in the last 30-plus years, several laws were enacted either granting or withdrawing the tax exemption privileges of LWDs. Worse, he said the Tax Code caused confusion about whether LWDs should pay taxes as their status was open to various interpretations by government agencies and judicial bodies.

“Even more disconcerting is the fact that other public utilities of similar nature such as the Metropolitan Waterworks and Sewerage System (MWSS) and National Power Corp. (NPC) were granted tax exemptions by the Bureau of Internal Revenue (BIR) hinging upon the same Tax Code provisions,” he noted.

Such inconsistencies have slowed the viable growth and efficient provision of safe, adequate and potable water to more than 15 million people outside Metro Manila, Lacson lamented. “In order to address the inconsistencies, this proposed bill is recommended as a counterpart measure of HB No. 5210 approved by the House of Representatives,” he said.

The bill includes LWDs in the list of government-owned or controlled corporations or agencies exempted from paying income tax. The Secretary of Finance shall promulgate and publish the necessary rules and regulations for the measure.