MAY 7, 2016

NR # 4193

Bill condoning unpaid income taxes due

from local water districts awaits PNoy signature
A bill seeking to remove the conditions for the condonation of all unpaid income
taxes due from local water districts now awaits the signature of President Aquino to
become a law.
Both the Senate and the House of Representatives ratified on December 15, 2015
the bicameral conference committee report on the proposal, which reconciled House Bill
3675 and Senate Bill 2518.
House Bill 3675 is authored by Rep. Romero S. Quimbo (2nd District, Marikina
City), and AKO BICOL Party-list Reps. Christopher S. Co and Rodel M. Batocabe. Senate
Bill 2518, meanwhile, was prepared by the Committee on Ways and Means with Senators
Ralph Recto and Juan Edgardo Angara as its authors.
Quimbo, chairman of the House Committee on Ways and Means, said the proposal
aims to provide that all unpaid taxes or any portion thereof due from a local water district
(LWD) for the period starting August 13, 1996 until the effectivity of the proposed Act
shall be condoned by the government, thereby relieving all LWDs from the payment
thereof.
Citing statistics from the Philippine Association of Water Districts (PAWD),
Quimbo said there are about 251 cases involving the unpaid tax liabilities of 164 water
districts from fiscal year 1997 to 2007 which should be covered by the implementation of
the condonation clause of Republic Act 10026.
Quimbo said the condonation is deemed necessary for the LWDs with no financial
capability to pay their tax liabilities. This would help them consolidate their resources in
order to expand water services, improve water quality and ensure the provision of a
reliable, secure and affordable supply of water to consumers, he said.
During the 14th Congress, Quimbo said RA 10026 was enacted to resolve the
inconsistencies in tax treatment that may have hampered the growth and efficient
provision of safe, adequate and potable water to more than 15 million people outside
Metro Manila.
Thus, RA 10026 included LWDs in the list of government agencies exempt from
the payment of income taxes and also allowed the condonation of their tax liabilities, said
Quimbo.

The reconciled HB 3675 And SB 2518 provides for the amendment of Section 289A of the National Internal Revenue Code of 1997, as amended, pertaining to Support for
Local Water Districts so that The amount that would have been paid as income tax and
saved by the local water district by virtue of its exemption from income taxes shall be
used by the local water district concerned for capital equipment expenditure in order to
expand water services coverage and improve water quality in order to provide safe and
clean water in the provinces, cities, and municipalities.
The water district shall adopt internal control reforms that would bring about their
economic and financial viability.
Moreover, the water district shall not increase by more than 20 percent a year its
appropriation for personal services, as well as for travel, transportation or representation
expenses and purchase of motor vehicles.
All unpaid taxes or any portion thereof due from a local water district for the period
starting August 13, 1996 until the effectivity date of this Act are hereby condoned by the
Government, thereby relieving all local water districts from the payment thereof. (30) rbb