He called on the Energy Regulatory Commission (ERC) to stop allowing NGCP from passing on to electricity consumers the 3% franchise tax it is supposed to pay the government. READ MORE:
He called on the Energy Regulatory Commission to stop allowing NGCP from passing on to electricity consumers the 3% franchise tax it is supposed to pay the government.The practice should be terminated as soon as possible,” also added the vice chairperson of the Senate Committee on Energy.
He pointed out that an ordinary household with a 200 kWh monthly consumption in the Meralco franchise area could have saved an estimated P37.32 per year had the ERC not allowed NGCP to pass on its franchise tax to consumers. At a hearing conducted by the Senate Committee on Energy, it was confirmed by ERC chairperson Monalisa Dimalanta that NGCP is allowed to pass on to consumers a franchise tax of 3% of all gross receipts derived from its operation in lieu of income tax and other taxes due to an ERC resolution, specifically ERC Resolution No. 7 Series of 2011.
But according to Gatchalian, a 2002 Supreme Court decision has emphasized that income tax, which is not an operating expense, cannot be passed on by a utility to consumers.Moreover, the franchise tax, according to the NGCP franchise, is in lieu of income tax.“Thus, the ERC should recant its 2011 resolution which included the 3% franchise tax as part of the total monthly transmission cost.
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