Bill seeking tax exemption for real property taxes on machineries owned by non-profit distributiion utilities pushed

Published January 9, 2021, 11:21 AM

by Charissa Luci-Atienza 

The  “power bloc” of the House of Representatives has sought the passage of a bill seeking to grant tax exemption on real property taxes imposed on machineries owned or controlled by non-stock non-profit distribution utilities.

PHILRECA partylist Rep. Presley de Jesus, APEC partylist Rep. Sergio Dagooc, Ako Padayon partylist Rep. Adriano Ebcas, and RECOBODA partylist Rep. Godofredo Guya lamented that the real property tax (RPT) imposes a financial burden to electric consumers as part of the electric bills’ pass-on charges.

“The business of an electric cooperative is imbued with public interest which gives life to national economic activity and promotes modernization and technological advancement in rural areas. Hence, if the assets used by the electric cooperatives are burdened with these RPTs, the end result would be an increase in electricity bills paid by the end-users,” they said. 

They noted that electric cooperatives mostly serve residential end-users. 

“The consequence of serving residential consumers as opposed to commercial consumers is that there is a need for longer distribution lines and more distribution poles in the former as opposed to commercial areas which cater to a limited area with higher electricity sales due to higher consumption. Hence, the cost of constructing distribution facilities in residential areas require more capital while barely increasing its electricity sales,” they said.

According to them, both the cost of construction and real property taxes form part of the electricity bill of our fellow Filipinos, eventually resulting to a higher charge rate per kilowatt hour. 

The House energy bloc filed House Bill No. 8044 or the proposed “Non-Stock Non-Profit Distribution Utility Real Property Tax Exemption Act” which aims to protect the interest of member consumer owners (MCOs) and all electric consumers. 

“This bill will also clarify the issue on tax exemption granted to all electric cooperatives under prevailing laws. With the current COVID-19 pandemic, there has been an increase in unemployment and cessation of business operations throughout the country,” they said in filing the measure. 

“This fact has proven to be a burden to pay for utility costs and basic sustenance. The least we could do is to receive our ‘kababayans’ from further financial distress. The Filipino people deserve better; they deserve affordable electricity,” they added. 

Covered by the measure are all non-stock, non-profit electric cooperatives organized and registered under Presidential Decree No. 269, as amended. 

Under HB No. 8044, all machineries attached to the soil and owned or controlled by electric cooperatives which are used for the distribution of electricity and its operations shall be exempt from real property taxes. 

The machineries under the proposed Act pertain to those defined in Section 199  of Republic  Act No. 7160, otherwise known as the Local Government Code of 1990 and are not encumbered by an lien or mortgage agreement,the bill provides. 

The electric cooperative claiming real property tax exemption shall be organized and registered under the National Electrification Administration (NEA), it said. 

The bill mandates the NEA to require all duly registered non-stock non-profit electric cooperatives to submit proof of ownership or control over the machineries. 

After the electric cooperatives’ compliance, the NEA shall communicate with the corresponding local government unit the eligibility of the electric cooperative for the tax exemption.