Baguio asks Beneco: Pay taxes

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Thursday, March 20, 2014

THE Baguio City Treasurer's Office is set to meet with Benguet Electric Cooperative next month to finalize payments on business and real property taxes long due to the local government.

City Treasurer Alica Onoza said as early as August 1, 2013, the City Government has been communicating with Beneco, giving them the assessment on business and real property taxes, including corresponding interests and surcharges from 1997 to 2012.

"It was last year, so I told our staff to give them a time frame to settle their accounts with us and discuss with us the taxes," she said.


City Local Revenue Collection Officer IV Ponce de Jesus said the firm has accumulated more P45 million in business taxes to the City Government from 1997 to 2012.

But the power utility firm, in its letter dated December 26, 2013 to Onoza, asked for reconsideration citing the financial statements they have submitted have been lumped in the financial statements they submitted to the local government resulting in a higher computation of business tax.

Acting Assistant City Treasurer Alex Cabarrubias said Beneco is asking the City Government to come up with a reassessment of their business taxes saying they submitted to the city gross receipts in Benguet as well as other passed-on charges remitted to power generators.

Cabarrubias, however, said they will still look into the computation of Beneco on its taxes as with their assessment to really get the revenue due to the city adding the LGU solely depends on gross earnings of a business establishment in collecting business taxes.

Onoza, meanwhile, added electric poles including properties of Beneco which include their offices in the city must also pay real property taxes to the city.

Mayor Mauricio Domogan told reporters Wednesday the City Government will submit its computation to Beneco but believes this is not as high as previously computed by the City Treasurer’s Office.

Domogan said with Beneco not registered under the Cooperative Development Authority, a Supreme Court ruling has already decided power utilities which are not legal cooperatives must not be exempt from paying business and real property taxes to the local government.

Meantime, Beneco general manager Gerardo Verzosa added in his letter to Onoza the tax due must not be based on gross sales as generally understood on businesses but on distribution, supply and metering charges only which goes to the firm.

"The assessment on business tax should not be based on gross sales but based on charges retained and collected by Beneco as a power utility," Verzosa said.

The general manager explained they only act as collectors of other charges such as generation, transmission, system loss among other charges which are eventually passed on to power producers and transmission companies.

He added Beneco must not be assessed on entirety of the bill but only on components it retains for operations and distribution services.

The general manager adds this is the same position they have with the municipalities of Mankayan and La Trinidad in Benguet who have also charged the power utility.

Versoza added if Beneco is made to pay business taxes, they will have to ask the Energy Regulations Commission to allow them to recover these payments from member-consumers citing the current electric bill does not reflect business taxes payment.

The firm also cited a Department of Finance Circular dated June 28, 2007 which says gross receipts where business taxes are based must be less of NPC and Transco charges, reinvestment fund and universal charges.

The firm also contested the more than P27 million business tax assessment of the City Treasurer’s Office from 2004 to 2012 saying based on Distribution, Supply and Metering Charges it only owes the city P8, 110, 101.91.

The firm also contends it is not required to pay Mayor's Permit in the city as its main office is at Alapang, La Trinidad, Benguet.

They are also contending their need to pay for real property taxes on electric poles in the city as these are not considered as real properties based on a Supreme Court decision in the case of Board of Assessment Appeals vs. Meralco which decided the poles are not subject to real property taxes. They also cited a National Electrification Administration memorandum circular advising electric cooperatives from paying real property taxes on electric poles.

The Beneco official finally added in his letter they are willing to further explore discussions with the City Treasurer to settle this matter.

Published in the Sun.Star Baguio newspaper on March 21, 2014.

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