The Water for the People Network (WPN) said that government should not accede to the ruling of an international arbitral court granting the Maynilad Water Systems, Inc. petition to collect its corporate income tax (CIT) from consumers.
The water rights group agreed that any impending water rate increase amid the ongoing dispute on pass-on CIT should be deferred.
The group likewise urged the scrapping of the concession agreement (CA), which it said allows onerous grounds for price hikes.
Maynilad has demanded that the Philippine government pay Php3.4 billion in indemnification for non-recovery of its CIT for the period March 11, 2015 to August 31, 2016.
This is after the Metropolitan Waterworks and Sewerage System Regulatory Office (MWSS-RO) refused to honor an arbitral decision favoring Maynilad while that for Manila Water remained pending.
The firms’ petitions included CIT recovery and other expenses unrelated to the delivery of water services.
These are lower than the firms’ petitioned rates, wich for Maynilad still included the CIT.
“In the first place, it is very wrong to pass on the burden of paying the CIT to consumers,” said the group.
The concessionaires are technically public utilities providing a very basic need such as water, said WPN. Aside from mandating the periodic alteration of basic charges through rate rebasing, the CA ensures the concessionaires’ steady flow of revenue and profit-making with other increases based on inflation, an environmental charge, and value added tax, noted the group.
“The amount being demanded by Maynilad alone could reach Php40 billion, tantamount to an increase of about Php5.00/cu. m. on current average tariffs. Any rate hike today is also insensitive due to the soaring prices of goods and services,” said the group.
Inflation has risen to 6.7 percent in September from 6.4 percent in August.
“It is the basis of the enrichment of private water firms at the expense of consumers. Government should instead ensure control over water resources to have these safe, accessible and affordable for the public,” WPN said. #