VII. CHARGING FOR WATER

See also:

I. ALLOCATING WATER FOR USE: WATER RIGHTS AND PERMITS
V. IRRIGATION WATER DEVELOPMENT

1. INTRODUCTION

Charging for water has the dual connotation of charging for the use of the raw resource, i.e. paying for the privilege of diverting or storing or abstracting the natural resource for use; and charging for water being supplied to the public through a reticulation system to satisfy a variety of needs associated with habitation and economic activity. As mentioned in the Foreword, the latter exceeds the subject matter scope of this manual. Also, charging in connection with the use of water of government-funded irrigation schemes has been separately presented in Chapter V on IRRIGATION WATER DEVELOPMENT, sub-chapter 2.4. This Chapter will focus on mechanisms and procedures for charging for the use of the natural resource water in connection with an abstraction, diversion or storage.

Paying for the privilege of abstracting, diverting or impounding water for use has policy overtones which are addressed to in principal legislation and are reflected in basic provisions typically empowering the government to establish and administer a system of charges for water utilized under a permit. Subsidiary legislation provides the procedural and substantive details of implementation. These typically concern (a) the rates of charges and criteria for their calculation; (b) procedures for the payment and collection of charges, including collection of arrears of payment; (c) waivers of charges. The material of this Chapter is arranged under corresponding headings.

2. RATES OF WATER CHARGES

Water charges are calculated based on the rates and the criteria fixed by the legislation. Criteria for the calculation of charges, however, can also be found in subordinate legislation (IV). Flat rates based on block quantities of water nominally permitted to be abstracted under a permit may be used in view of the ease of administration of such a charging system (I and III). In the alternative, unit rates may be employed so as to calculate charges on the basis of the quantities of water allowed to be abstracted or the power allowed to be developed under a permit, or of water actually abstracted or power actually developed. The unit of measurement can be a given volume of water or the surface of land where water is applied. Moreover, rates can be structured in such a way that those who are allowed to abstract more water pay proportionately more per unit of water permitted to be abstracted than those who are allowed to abstract less (II).

I - MALAWI - Water Regulations, 1969 10. The fees and rents payable in respect of grants, easements, etc. shall be as are specified in the Second Schedule hereto:... Second Schedule - Rents - See Appendix VII, page 405. II - PHILIPPINES - Water Rules and Regulations 7. Except when the appropriation is for family domestic purpose or when the quantity of water appropriated for agricultural use is not more than 5 litres per second, all appropriators shall pay to the Council in the manner provided under Section 6 thereof^[59], an annual water charge in accordance with the following Schedule: A. For the use of water when diverted/extracted from the natural source:
Rate of Withdrawal (litres/second)	Charge per litre/sec.
1) Not more than 30	P 0.50
2) More than 30 but not exceeding 50	0.75
3) More than 50	1.00
B. For the use of surface water at its natural location for fish culture: 1) For a surface area not to exceed 15 hectares - P20.00/ha. 2) For a surface area of more than 15 hectares - P300 plus P30/ha. of the excess over 15 hectares. For this purpose a fraction of a hectare shall be considered as one hectare. The Council may revise the above water charges or impose special water rates from time to time as the need arises taking into consideration, among others, the following: (a) Intended use of water; (b) quantity/rate of water withdrawal vis-a-vis other users taking into account the water bearing potential of the source; (c) Environmental effects; (d) Extent to which water withdrawal will affect the source; and (e) Development cost of bringing water from the source. III - UGANDA - Water Resources Regulations, 1998 26. Water charges (1) A person referred to in regulation 3 or 10^[60] shall pay Water the relevant annual water charge specified in the Second Schedule to these regulations. (2) A person shall pay the water charge referred to in subregulation (1) of this regulation whether or not that person is a registered user of water under regulation 10 of these regulations, or has been granted a permit under regulation 3 of these regulations. (3) The Director may, wherever, (a) the amount of water used by a person referred to in regulation 10 of these regulations has not been measured; (b) any device used to measure the amount of water used by a person referred to in regulation 10 has failed to measure the amount of water used accurately for all or any part of the preceding year; estimate the amount of water used by that person in the year and that person shall pay the relevant annual charge specified in the Second Schedule to these regulations. (4) The Director may specify, (a) any date or dates by which an amount of charge due under this regulation shall be paid; (b) that any amount of charge payable under this regulation may be paid in instalments. (5) A person who contravenes the provisions of subregulation (1) or (2) or this regulation commits an offence and is liable, on conviction, to the penalty specified in section 40 or 104 of the Statute. Second Schedule - Fees and charges - See Appendix I, page 295. IV - VIET NAM - Decree No. 68/1998 Detailing the Implementation of the Ordinance on Natural Resource Tax (Amended) Chapter I - Natural Resource Tax Payers and Objects 1. All organizations and individuals of all economic sectors, including: State enterprises: joint stock companies: limited liability companies: cooperatives: cooperation groups: private enterprises. production and/or business private households; foreign-invested enterprises or foreign parties to business cooperation contracts under the Law on Foreign Investment in Viet Nam; and other organizations and/or individuals that exploit natural resources in all forms shall have to pay natu ral resource tax as prescribed in Article I of the Ordinance on Natural Resource Tax (amended), except for those defined in Article 3 of this Decree. 2. All kinds of natural resources found within the inland areas, offshore islands, internal waters, territorial waters, exclusive economic zones and continental shelf under the sovereignty of the Socialist Republic of Viet Nam shall be subject to natural resource tax,. including: ... (7) Natural water, including: terrestrial water, underground water, except for mineral water and natural thermal water already specified in Point 2 of this Article.... Chapter II - Tax Calculation Bases and Natural Resource Tax Index 5. The bases for calculating natural resource tax are the actually exploited output of commercial natural resources, the tax calculation price and the tax rate. 6. The actually exploited output of commercial natural resources is the quantity, weight or volume of natural resources actually exploited in a taxation period, regardless of the purpose(s) of the exploitation of natural resources. 7. (1) The natural resource tax calculation price is the selling price of a natural resource product unit at the place of natural resource exploitation. (2) For natural resource of which the selling price has not been set yet, i.e. those exploited for further processing or those containing different compounds, the natural resource tax calculation price shall be determined on one of the following bases: - The selling price of the kind of exploited natural resource of equivalent value. - The selling price of the substance in primary form and the content of such substance in the exploited natural resource: or the prices of the substances in primary form and the content of each substance in the natural resource. - The selling price of the goods made of the exploited natural resource minus the production costs of such goods. (3) For natural water used for hydroelectric power generation, the natural resource tax calculation price is the selling price of commercial electricity; ... The provincial/municipal People's Committees shall specify the specific tax calculation price for each kind of natural resource under the Ministry of Finance's guidance.

3. PAYMENT AND COLLECTION OF CHARGES

Detailed provisions may regulate the manner and frequency of payment of charges, and the recovery of charges, as in the example below.

AUSTRALIA - QUEENSLAND - Water Resources (Rates and Charges) Regulation, 1992

Part 3 - Water Charges

16A. Notice for payment of charges or fees

(1) A charge under section 13 or 16, or a fee under section 14:

(a) may be made and levied:

(i) for the period decided by the chief executive; or
(ii) if the chief executive does not decide a period: quarterly; and
(b) may be made and levied by giving written notice to the person to whom water is supplied; and
(c) becomes payable on the day the notice is issued; and
(d) must be paid within 30 days after the notice is issued; and
(e) for any part of the charge or fee remaining unpaid after 30 days: accrues interest at the rate stated in section_5.

(2) A notice given under subsection (1)(b) must state:

(a) the amount of the charge or fee and the period for which it is levied; and
(b) the time and place for payment; and
(c) that any part of the charge or fee remaining unpaid after 30 days accrues interest; and
(d) the interest rate.

(3) Interest payable on any part of a charge under section 13 or 16, or a fee under section 14, remaining unpaid after 30 days applies from the day the notice is issued to the day the fee or charge is paid.

16B. Recovery of charges and fees

(1) Any part of a charge under section 13 or 16, or a fee under section 14, that becomes payable under section 16A may be recovered by the chief executive by action in a court of competent jurisdiction.

(2) Interest payable on a charge or fee may be recovered in the same way the charge or fee may be recovered.

18. Payment of a nominal allocation charge by instalments

(1) This section applies if an owner of land pays a nominal allocation charge by instalments.

(2) The owner must:

(a) pay interest on the unpaid part of the charge; and
(b) comply with the agreed terms for payment of instalments.

(3) Interest on the unpaid part of the charge:

(a) accrues from the day the nominal allocation is granted; and

(b) is payable at a rate that is 1.5% above the QIDC business variable lending rate applying on the day each instalment is payable.

4. WAIVERS

Water charges can be waived or remitted under special circumstances, as determined also by subsidiary legislation. Such circumstances typically have regard to particular water user groups - e.g. the government - or the termination of a permit, as in the first example below. Hardship and other circumstances may also be taken into consideration for exemption or reduction of charges (II).

I - CANADA - BRITISH COLUMBIA - Regulation and Tariff of Fees, Rentals, and Charges under the Water Act

5.18 No rental shall be payable under this tariff in respect of any licence for any purpose which authorizes the use of water upon land reserved for Indians, provided that the land is not leased to or occupied or used by any person who is not an Indian.

5.20 No rental shall be payable in respect of any licence that authorizes the use of water in and about any fish-hatchery maintained and operated by the Government of Canada or the Government of British Columbia.

5.21 No fees, rentals, or other charges shall be payable in respect of any licence or permit where the Minister of Lands and Forests is the applicant or the holder of a licence or permit.

5.22 When a licence is cancelled or abandoned, the Comptroller may remit any outstanding rentals due in respect thereof.

II - VIET NAM - Decree No. 68/1998 Detailing the Implementation of the Ordinance on Natural Resource Tax (Amended)

Chapter IV - Natural Resource Tax Exemption or Reduction

12. The natural resource tax shall be exempted or reduced in the following cases:

... (2) Natural resource-exploiting organizations and/or individuals that, due to natural calamities, sabotages or unexpected accidents, suffer from losses of their natural resources which have already been declared and taxed, shall be considered for the exemption from the payable amount of natural resource tax on the lost volume of natural resources. In cases where they have already paid natural resource tax, the paid tax amount shall be reimbursed or deducted from the payable natural resource tax amount of the following taxation period if it is so agreed upon by the tax paying organizations and/or individuals.

... (5) Natural resource tax shall be exempted for natural water used for the generation of hydroelectric power, which is not transmitted into the national power grid.

^[59] I.e. in postal money order through the Office where the application is filed.
^[60] Holders of a water permit or a registered water work or use.