By Cielito M. Reganit
MANILA, Feb. 25 (PNA) — The chair of the House of Representatives Ways and Means Committee said on Wednesday the proposed law seeking to amend the tax provisions for the National Grid Corporation of the Philippines (NGCP) would address the revenue impact of the recent law on higher tax exemption for bonuses and a future legislation on income tax.
Marikina City Rep. Romero Quimbo said ongoing discussions on House Bill No. 4751 comes at a very opportune time as the government seeks ways to cover supposed revenue losses from tax measures that would benefit the masses.
The House leader added that the proposed amendments to Republic Act No. 9511 – the law that granted the NGCP a franchise to engage in transmitting electricity – would address the disproportions in the NGCP franchise charter, which essentially gave the corporation preferential treatment over the generation and distribution companies of the power sector.
“By virtue of R.A. 9511, the NGCP, which is a power grid operator and transmission service provider, is exempted from paying income tax and VAT, and only pays a three percent (3%) franchise tax as opposed to distribution and generation companies,” Quimbo said.
“This caused revenue loss to the government amounting to approximately PhP30 Billion from 2010 to 2013,” he said.
In previous committee hearings, the Department of Finance (DOF) said the grant should not have been given to NGCP in the first place as there is no valid distinction between transmission and generation/distribution.
“Effectively, what happened was a class legislation, which the Constitution prohibits,” the Marikina lawmaker pointed out.
Quimbo likewise pointed out that the NGCP distributed at least PhP64 billion in dividends last year but only paid an average of PhP1.3 billion in franchise taxes.
“So if they are making money, why are we still giving them preferential franchise tax rates? If income taxes and other taxes are going to be imposed on the NGCP, then more than PhP10 billion can be collected by the government annually and this can easily cover the supposed revenue losses from our income tax measures that benefit the middle classes,” Quimbo said.
He said NGCP even got the 25th spot in the latest Securities and Exchange Commission’s (SEC) list of Top 500 corporations in the Philippines but is nowhere to be found in the Bureau of Internal Revenue’s (BIR) list of top paying corporations.
“The NGCP got a sweetheart deal. With the special privilege given to NGCP, its income grew significantly but deprived the government of the much needed revenues amounting to almost PhP30 billion in three years, which could have financed 15,000 school classrooms,” the chair of the powerful Ways and Means committee said.
Because of these, he said the government needs to focus on addressing the loophole of the NGCP franchise charter, which benefits an already profitable corporation, in order to offset the revenue impact of the higher tax exemption on bonuses and income tax reforms which would benefit millions of low to middle class income earners and their families.
“We have had strong opposition to the higher tax exemption on bonuses and income tax reforms, which would benefit millions of low to middle income earners, and yet we allow one corporation to cause us a PhP10-billion revenue loss every year. That is grossly unfair,” he said.
“It is imperative that we consider the amendments to NGCP’s tax regime now and transfer the benefits of taxation to those who badly need and richly deserve it,” Qumbo said. (PNA)