THE Bacolod City Council has approved a resolution reiterating the strong opposition to the imposition of the 12-percent value-added tax (VAT) to water consumers of Bacolod City by PrimeWater Infrastructure Inc.
The resolution authored by Council Wilson Gamboa Jr. was approved during the regular session of the City Council on Wednesday, January 26, 2022.
Gamboa said the Bacolod City Water District (Baciwa) Board of Directors negotiated a 25-year contractual joint venture with PrimeWater and they agreed on financing development, rehabilitation, expansion, improvement, operation of water supply and septage management systems of the water district.
As a form of privatization, he said the accounting, administrative, engineering and maintenance functions would all be transferred to PrimeWater.
Gamboa 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.
Gamboa noted that at least 15,000 signatures were gathered by the groups through a petition opposing the privatization of Baciwa.
Gamboa said the Barangay Resolutions opposing the privatization of Baciwa were also adopted by Barangay Councils of Sum-ag, Pahanocoy, Tangub, Granada, Alijis, Estefania, 10, 12, 16, 22, 24, 34, 36, 37 and 40.
He said Bacolod City residents are opposing, among others, the projected 75 percent likelihood of an increase in the basic water rates during the joint venture and the imposition of the 12 percent VAT which is currently not applied on water services by Baciwa.
“The VAT imposed on water consumers of Bacolod City at 12 percent is based on Revenue Code of 1997 as amended by Republic Act 9937 or Reformed Value Added Tax Law of 2005. The mentioned Tax will be implemented through Primewater and will be passed on to water consumers,” he added.
Republic Act 7109, known as 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.
Section 76 of Presidential Decree 198 provides exemption from all taxes, duties, fees, imposts and other charges by the Government and that includes the value-added tax, the councilor said, adding that this VAT will be imposed to water consumers starting February 1, 2022.
He said the management of the water district insisted that their joint venture agreement with PrimeWater was not privatization.
“The imposition of this 12 percent value-added taxes on water consumers may have circumvented the Joint Venture Agreement into privatization of Bacolod Water District because only private corporations, individuals and certain government-owned and controlled corporations are liable for taxes and not any water district,” he added.