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Undermining
LGU revenue generation One of the proposals submitted by the National Government to alleviate the country’s fiscal woes was the 25-percent cut in the Internal Revenue Allocation (IRA) of local government units, a proposal met with jeers by local officials as expected. Let’s see what a taxpayer residing in one of the LGUs has to say to the "shared pain package" of Rep. Joey Salceda that promises to generate some P215 billion for the National Government in three years at the expense of local government units not getting their lawful share of internal revenues collected. Mr. Sonny Pulgar of the Sentro ng Gabay Legal sa Quezon wrote us a letter that drives home the point completely on the issue of local tax collection. His view is that a local government unit may actually do away with the entire IRA if only it can collect the right amount of taxes due it. He said: "Why do we put all the blame on the National Government for the fiscal crisis mess when we can partially solve this problem if we can harness our local governments to collect local taxes. "Since 1991, LGUs were (made) autonomous and can legislate and collect realty taxes as mandated by the Local Government Code. Sadly, our local Osamas are busy (with) their re-election and dynasty building that the matter of raising local revenues is left to the magnanimity of the National Government through the Internal Revenue Allotment. "Take the case of Quezon Province, with its anemic tax collection and mindless IRA misallocation…" He said that for the last three years, his organization — as part of its crusade to educate people and help the province of Quezon on the issue of collecting the right taxes — was running after two independent power producers that have been dodging calls to pay the appropriate real property taxes. To date, the two coal-fired thermal power plant companies have accumulated a hefty P5 billion in back taxes, and counting. The two IPPs are: Quezon Power Ltd. Co., the supplier of the Manila Electric Co., which is operating a 440-megawatt plant in Mauban; and Mirant Phils., which is running the 600-megawatt Pagbilao coal plant for the National Power Corp. Quezon Power is majority owned by Intergen, a US power firm with Shell International and Bechtel as stockholders. Mirant, on the other hand, is one of the five highest earning corporations in the country today. The organization has lodged cases against the two IPP giants, and one case has reached the Supreme Court already. Local revenue generation blocked In his letter, Mr. Pulgar, representing the Sentro ng Gabay Legal sa Quezon, lamented the interference of some government entities as they press for the collection of taxes due the locality. He cited for instance that in the case filed against Quezon Power, it was surprising that the Department of Finance has even backed up the IPP and upheld the low appraisal value given by the IPP on the power plant assets, in effect, overturning the valuation made by the municipal assessor of Mauban. Pulgar writes: "The DOF has agreed with the lesser assessment submitted by Quezon Power Ltd. to the prejudice of Quezon Province. This matter is now being reviewed by the Supreme Court through the initiative of Sentro and has been stalled for the last two years." According to Pulgar, another government outfit has also intervened in the case against Mirant that undermined efforts by the local government to collect P2 billion in tax arrears. Napocor has filed a pre-emptive case before the Central Board of Assessment Appeals saying that the government owns the property and would take over the operations of the power plant in 25 years anyway. Hmm, is this a case where local tax officials are harassing big business or are not knowledgeable of what they are to collect? Or is this another example of strong lobby at work at the national level to the detriment of far-away under-developed local units without the benefit of adequate representation? Local development hampered Continuing with our reader’s letter, Pulgar points out "A poor and backward province like Quezon with a two million population badly needs these local taxes to finance its health, public education and barrio road programs. Many inhabitants are dying of dengue, TB, and respiratory and cardio-vascular diseases. "Most of its young population is out of school if not ending up as sex workers in Japan or elsewhere. Young people outside of Lucena City are not even elementary graduates due to lack of schools and teachers add to the fact that their families are too poor and have no permanent livelihood to finance the children’s education to start with. "While the two big IPPs have launched well-publicized Corporate Social Responsibility programs, the true essence of CSR does not exist in the priorities of these two power companies. "If only the province of Quezon is helped to collect P5 billion in tax arrears by the IPPs, who needs a share of the IRA? This spells real autonomy. Local projects are adequately funded and the National Government burden is lessened." Before we laud entities for their social development programs or for contributing to the Bayanihan kitty of Speaker Joe de Venecia, these companies’ contribution to the much-needed revenues of localities where they do business must be double-checked. They may be trying to wiggle out of what they lawfully owe the local communities. ‘Breaking Barriers’ with North Luzon Expressway operators "Breaking Barriers" on IBC-TV13 (11 p.m. every Wednesday) will feature Ms. Marlyn Ochoa, Asst. Vice-President and Head of Public Relations, Manila North Tollways Corporation on Wednesday, 20th October 2004. The government needs private sector investment in developing and implementing infrastructure projects. Without private sector participation, our infrastructure will remain under-developed. On the other hand, the private sector needs incentives as inducement to invest. What incentives were given to Manila North Tollways Corporation (MNTC) to undertake the North Luzon Expressway reconstruction project? Are the toll rates that MNTC allowed to collect commensurate to the promised improvements in the expressway? Is the manner of determining the appropriate toll fees transparent and well defined? Watch it. Pre-need industry update on TV "Isyung Kalakalan at Iba Pa" on IBC News (4:30 p.m. and 10:30 p.m., Monday to Friday) ends today with an update of issues that continue to hound the pre-need industry. Years of poor government regulation over pre-need companies have caused a plethora of problems during the last decade. In trying to correct the situation, tougher strictures were imposed on this sector during the last few years. But these well-meant efforts may be too late. Even then, the legislature is batting for the passage of a more comprehensive pre-need code of conduct to avoid past costly mistakes and give pre-need policyholders better protection. Watch it. Should you wish to share any insights, write me at Link Edge, 4th Floor, 156 Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at reygamboa@linkedge.biz. If you wish to view the previous columns, you may visit my website at http://bizlinks.linkedge.biz.
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