POSTSCRIPT / January 28, 2010 / Thursday


Philippine STAR Columnist

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RFID makes redundant car windshield stickers

GOODBYE, STICKERS: The stickers blocking the view of windshields of motor vehicles will be scraped off when all conveyances are finally equipped with a radio frequency identification (RFID) tag by November.

The plan was disclosed yesterday by Assistant Secretary Arturo C. Lomibao, LTO chief, explaining that the RFID will make the old stickers redundant. Even the conduction stickers used on new cars being moved around by auto distributors can then be phased out, he added.

Removing the four-inch-by-two-inch windshield stickers, whose clutter reduces visibility, will save motor vehicle owners P50 a year, or P500 in 10 years. Compare this saving to the smaller P350 cost of the RFID tag that is good for 10 years.

The old stickers’ replacement by the RFID will deprive mulcting traffic officers of an excuse for harassing drivers of vehicles without current windshield and license plate stickers (which will also be phased out).

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FAKE ‘PISTON’: On the RFID issue, Lomibao expressed confidence that with all objections explained away, the Supreme Court will uphold the legality of the electronic tagging meant to weed out colorum and out-of-line passenger vehicles, discourage carnapping, and boost law enforcement.

The government has discovered that the Pagkakaisa ng mga Samahan ng Tsuper at Operator Nationwide (PISTON) – which questioned the RFID before the high court — has no legal personality. Its certificate of registration was revoked way back in 2003 by the Securities and Exchange Commission.

On the other hand, a much bigger nationwide confederation of jeepney operators and drivers that has been allowed to intervene in the case came out endorsing the RFID and asking that its members be tagged with it.

The Commission on Human Rights said earlier that the use of the RFID did not violate privacy and human rights as alleged by some leftist groups and protesters who are ignorant of the RFID features.

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PAGING TEVES: The brownouts remind us of a basic problem that has dragged on unnecessarily — to nobody’s benefit and everybody’s harm — over the collection of real property taxes by local governments from independent power producers (IPPs) in their areas.

The Department of Finance should step in right away and help resolve the question of who should pay the realty tax and at what rate. Paging Finance Secretary Margarito Teves.

Local government units insist on assessing and collecting from the IPPs, but the power firms plead that under their contracts with the National Power Corp., it is Napocor, not them, that is obligated to pay realty taxes.

So as not to disrupt operations, many IPP advance the taxes and pray that Napocor reimburse them fast enough. But Napocor seems to be taking its time.

Local governments collect some P64 billion in real property taxes from IPPs. To pressure power firms to pay directly to them, some LGUs threaten to shut them down by not issuing them business permits. Some even take over their operations when they do not come across.

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NAPOCOR OBLIGATION: There is no question that LGUs are empowered to impose certain local taxes. But imagine local government personnel operating a commercial power plant!

An interesting case study is the Bauang Private Power Corp., owned by First Gen Corp., that has been taken over by the Bauang municipal government over unpaid real property taxes amounting to P1.866 billion.

The 225-mw power plant in Bauang, La Union, has a Build-Operate-Transfer (BOT) agreement with the Napocor for 15 years starting 1995.

The Philippine Independent Power Producers Association (PIPPA) stressed that the Napocor, and not IPPs like Bauang Private Power Corp., is supposed to pay the taxes because it is so provided in their BOT contract.

The PIPPA alone is composed of 25 power producers, with a capacity of at least 50 mw each. It includes First Gen Corp., Aboitiz Power Corp., AES Corp., and TeaM Energy Corp.

This is one issue that the DoF can and should help resolve soonest, not only to delineate liabilities and expedite payments, but also to give clear and firm guidelines for big investors.

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WHICH RATE?: The issue became more complicated after the LGUs increased their real property tax rates from the previous 2.5 percent of 10 percent of the assessed value of property occupied by power plants to 2.5 percent of 80 percent.

Napocor alone has been assessed for real property taxes totaling P19 billion. The whole power industry has been slapped around P64 billion, including penalties, surcharges and interests. The amount is being contested.

There have been reported attempts to hammer out a compromise solution, with the parties on the brink of agreeing on 2.5 percent of 30 percent (of the assessed real estate value), but nothing has been finalized.

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CONFLICTING VIEWS: When the LGUs began using the 80-percent basis, protests were filed, first with the Court of Tax Appeals and then the Supreme Court. The high court has ruled that ownership is the issue, so the IPPs, as operator of the assets, are liable for the taxes.

But IPPs keep pointing to their BOT contracts with Napocor and invoking the sanctity of valid contracts.

This is a valid concern of the IPPs because of the enormous amount involved. The issue impacts on the conduct of doing business in the country as investors need a stable business climate.

While the PIPPA has expressed its members’ willingness to cooperate and advance the real property taxes due, it wants a guarantee from the Napocor that it will reimburse the advances.

These conflicting interpretations of contracts and obligations should have been ironed out before the government lured investors and before the Napocor signed the contracts with IPPs.

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(First published in the Philippine STAR of January 28, 2010)

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