24 water district executives face arrest for tax evasion

At least 24 directors and general managers of various water districts in Mindanao have been issued warrants of arrests by local courts while the accounts and assets of six other water districts were frozen for their alleged failure to settle tax obligations with the Bureau of Internal Revenue (BIR), a top official of the Local Water Utilities Administration (LWUA) said yesterday.

However, instead of generating revenue for the government the BIR crackdown may result to the collapse of water districts and affect at least 12 million residents, LWUA Administrator Larry Jamora told reporters during a press conference yesterday.

Jamora said because of the garnishment order issued by the BIR, the local water districts of Calbayog City, Catbalogan in Samar, Carigara, Hilongos in Leyte, Naval in Biliran, and Butuan City in Agusan del Norte could no longer draw money from their banks that may result to the collapse of their operations.

He said local courts have also issued warrants of arrest for general managers and directors of the water district in Davao City, Cotabato, Digos and Tagum for their refusal to pay the tax assessments.

"The water districts are willing to pay taxes but they must given enough time to raise the money," Jamora said.

He said the BIR under resigned commissioner Guillermo Parayno has focused its tax campaign on water districts after 32 years. The issue on whether the local water districts are subject to franchise and income tax are the main issue that must be resolved.

Jamora has asked the BIR for a moratorium on the garnishment of bank accounts and assets of water districts with franchise and income tax deficiency because it has hampered the delivery of safe water to the public.

"BIR should go slow in the issuance of freeze orders on back assets of water districts because these local corporations are engaged in the delivery of vital services to residents and industries in the countryside," he said.

At least 12 million residents outside Metro Manila and some 10,000 small-and-medium scale industries are dependent on local water districts. The actual tax deficiences of local water districts are not yet properly determined because the BIR is doing a random assessment.

LWUA officials lamented that while President Arroyo is embarking on a multi-billion peso potable water program in the countryside, the BIR, in launching its own crackdown on water districts is endangering the delivery of safe water to the public.