30 June 2006
Amid sundry claims of administration officials that the Arroyo government has revenue shortfall for this year, the people are again unwittingly made to shoulder a private corporation’s profit agenda after the Board of Investments (BOI) approved last December 20, 2005 Manila Water’s request for a year’s extension of its Income Tax Holiday (ITH).
Through this devious design, the Ayala-run water company will be relieved from paying about P650 million worth of income tax for year 2006 under the pretext that it will spend the money, which rightfully belongs to the public, on improving and expanding its water services.
Where Manila Water gets the cheek to ask for the extension of their ITH, the Freedom from Debt Coalition (FDC) is at a loss over. The private water concessionaire, through this new scheme, is essentially asking the public to subsidize its capital expenditure! At this point, FDC wonders what the World Bank and the Asian Development Bank—proponents of the privatization of the Metropolitan Waterworks and Sewerage System (MWSS)—would say over this case of the public subsidizing the operations of a private business when these multilateral banks’ policy explicitly orders Philippine government to remove its subsidy to basic social services such as water?
And at a time of desperate moves to earn revenues, when the Arroyo administration mercilessly implements the expanded value added tax that currently sends prices of basic commodities skyrocketing, how can the government act so generously and forego P650 million in favor of an already profitable private business?
Manila Water has been enjoying income tax breaks for six years now. In the course of its eight-year operation as private water provider for the East Zone, it has increased its water rate by 800 percent. It was even found out by the Commission on Audit to have earned almost 41% profit margin in 1999 alone—way, way above the 12% return on rate base (RORB) ceiling for public utilities.
Even if the company dazzled BOI’s eyes with promises that the ITH extension will redound to consumer benefit through improvement in water service coverage and water supply availability in some areas of Rizal province, any person in his/her right mind would have seen through this scheme as another ploy to extort money from the public. The private water distributor claims that its extended tax holiday will enable it to provide water connection to more households by laying additional 120 kilometers of pipes. As if after doing so, Manila Water will be providing free connection to its customers. But such is not the case.
What the water company does not bother to tell the public is that these commitments to improve water services are actually part of their obligations when they won the right to operate water distribution facilities for Metro Manila’s east zone residents. The Concession Agreement, even with the amendments to accommodate profiteering motives of the private concessionaires (including Maynilad), says so.
In this light, we, from the Freedom from Debt Coalition, express our indignation at the government/BOI’s approval of Manila Water’s ITH extension and we caution the MWSS Board of Trustees against any intention of certifying it. Mrs. Arroyo, one way or another, should stop making her administration more illegitimate as it already is by refraining from issuing decisions that betray public trust.
We demand that the people’s human right to water be respected and protected. Human right to water is too sacred to be wantonly sacrificed for the benefit of corporations owned by elite families who, it seems, must be placated and pleased by an administration whose end is about to come.Water is a human right!
Public service, not private profit!