NGCP tax passthrough questioned

A SENATOR on Monday urged the Energy Regulatory Commission (ERC) to stop the National Grid Corp. of the Philippines (NGCP) from passing on to consumers the 3% franchise tax it is supposed to pay the government.

“The ERC should stop the passthrough,” Senator Sherwin T. Gatchalian said in a statement. “Consumers should not be paying for what the NGCP owes the government. The practice should be terminated as soon as possible.”

The lawmaker, who heads the energy committee, said an ordinary household with a 200-kilowatt-hour (kWh) monthly consumption in the franchise area of Manila Electric Co. could have saved about P37.32 yearly had the ERC barred the passthrough.

At a Senate hearing last week, ERC chief Monalisa C. Dimalanta said NGCP could pass on to consumers a franchise tax of 3% of all gross receipts from its operation in lieu of income tax and other taxes, based on an ERC resolution, Mr. Gatchalian said.

But income tax, which is not an operating expense, cannot be passed on by a utility to consumers, the lawmaker said, citing a Supreme Court ruling.

“In the case of NGCP, the franchise tax is not an operating expense. Moreover, the franchise tax, according to the NGCP franchise, is in lieu of income tax. As such, NGCP should not be allowed to pass on its franchise tax to consumers,” he added. — Jan Jiminel Cacdac