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Imposition of 12% VAT by Primewater opposed

BY CHRYSEE G. SAMILLANO

The Bacolod Sangguniang Panlungsod is strongly opposing the move of Primewater Infrastructure Incorporated through its Joint Venture Agreement with the Bacolod City Water District to impose a 12 percent Value Added Tax to water consumers of Bacolod City.

The resolution authored by Councilor Wilson Gamboa Jr., said the BACIWA Board of Directors negotiated a 25-year contractual joint venture with Prime Water Infrastructure Venture (Primewater).

Prime Water agreed on financing, development, rehabilitation, expansion, improvement, operation of water supply and septage management systems of the Bacolod Water District. As a form of privatization, “the accounting, administrative, engineering and maintenance functions are all being transferred to Primewater,” it said.

The residents of Bacolod City and consumers of BACIWA through the Bacolod Consumers Watch, Inc. and Amlig Tubig Coalition, together with the Social Action Center of the Diocese of Bacolod are opposing the privatization of water services through the joint venture. At least 15,000 signatures were gathered by the groups through a petition opposing the privatization of BACIWA, the resolution said.

Moreover, Barangay Resolutions opposing the privatization of Baciwa were adopted by Barangay Councils of Sum-ag, Pahanocoy, Tangub, Granada, Alijis, Estefania, 10, 12, 16, 22, 24, 34, 36, 37 and 40, it added.

The resolution said Bacolod City residents are opposing, among others the projected 75 percent likelihood of increase on the basic water rates during the joint venture and the imposition of the 12 percent Value Added Tax which is currently not applied on water services by Baciwa.

Current BACIWA consumers are also opposing the plan to tap the already depleted ground water of Bacolod City, instead of a public-to-public or district-to-district partnership to tap surface waters with the neighboring local governments of Murcia, Talisay and Bago, it said.

The resolution said Bacolod City residents, consumers and employees of BACIWA, are also concerned of the complaints by the consumers on the quality of water services, and the Commission on Audit observations against the Primewater joint venture with Baciwa.

The Value Added Tax is imposed on water consumers of Bacolod City at 12 percent based on Revenue Code of 1997 as amended by Republic Act 9937 or the Reformed Value Added Tax Law of 2005. The mentioned tax will be implemented through Primewater and will be passed on to water consumers, it said.

Republic Act 7109 or an Act Granting Tax Exemption to Local Water Districts provides for the exemption of income taxes except on taxes on interest income from deposits and on investments with no direct relations with water services, the resolution said.

This Value added Tax will not be imposed to water consumers if the accounting, billing, reporting, financing functions and profits were withheld by the BACIWA management instead of giving such functions to Primewater, it said.

The management of the Bacolod Water District insisted that their joint venture agreement with Primewater Infrastructure Corporation was not a form of privatization. But the imposition of a 12 percent Value Added Taxes on water consumers signifies the privatization of Bacolod Water District because only private corporations, individuals and certain government owned and controlled corporations are liable for taxes and not government agencies, the resolution said.

Wherefore, should the 12 percent value added tax be imposed, it should be to the account of Primewater and should not be passed on to the water consumers.*

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