Telecom firms buck Gordon's text remit bill

Telecommunication companies expressed apprehension yesterday over the bill filed by Sen. Richard Gordon that mandates them to remit half of their revenues to health and education.

Froilan Castelo, head of Globe regulatory affairs, said the move would force telecommunication companies to raise the cost of text messaging, and reconsider their unlimited text promos.

Castelo explained that from the current 27 centavos per text message, the blended price of text would become 40 centavos or an additional of 50 centavos for those spending P1 per text message sent. The “blended” price pertains to the unlimited texts and other promotional services of telcos.

Castelo said Globe is supportive of advocacies which dwell on health and education, but suggested that these projects be done by directly allocating tax payments of telcos to health and education.

In a position paper, Globe emphasized that cellular mobile telephone service (CMTS) providers already have their own active corporate social responsibility programs that provide substantial assistance to education, community welfare, and nation building in general.

“Hundreds of millions of pesos are poured in by the CSR organizations of the CMTS providers to these endeavors, not to mention the manhours and executive time spent thereon,” it said.

Gordon’s remit bill would mean an additional burden to consumers, who might suffer the brunt once the additional taxes are passed on to consumers, Castelo said.

He said the bill is “confiscatory” in nature.

Roy Ibay, Smart legal manager, shared Castelo’s views, adding that the bill appears like a revenue bill which should originate from the House. He also pointed out that the bill was discriminatory against telcos.

“Right now in its face, it appears a revenue bill so it is unjust and confiscatory in the sense that it is discriminatory against telephone companies,” Ibay said.

He added that the set-up for unlimited texting will be adversely affected because of the pending congressional requirement. This measure would also be likely passed onto consumers because it is considered as a cost of production.

To dramatize his point, Ibay also pointed out that the telecommunications industry has also ban affected by the world economic crisis.

“What we’re saying is that don’t kill the goose that lays the golden egg at the moment,” he said, adding that the telecommunications industry is also right now in an economic slowdown.

“So any proposal by the government to tax any of its service or text service should probably undergo a thorough examination first — a study because even if the objectives might be noble, the aggregate economy also is at stake here,” Ibay said.

Globe also pointed out that the bill is an underhanded way of imposing sin or excise taxes on texting.

“Telecommunications services in general and texting in particular cannot be included in the category of ‘sin products’ that could be subjected to an excise or sin tax, or any of its derivatives such as this proposal under SB 2402. In fact, texting has become life’s essential and a productive tool for millions of Filipinos,” it said.

It added that SB 2402 is a disincentive to both actual and potential Philippine investors.

“The imposition simply adds fire to the belief that the reason for this selective and confiscatory tax is simply due to the immense popularity of texting and the misperceived huge revenues of the CMTS providers from the service which, in the first place, should be viewed in relation to the billions of pesos of capital and operational assets and costs of these providers,” it said.

Globe stressed that “this belief will only send the wrong message to actual and potential investors and will paint, in a manner more pronounced and strongly, the government’s policy-making as ever fluctuating, flip-flopping, unpredictable and capricious at best — the reason why the Philippines lag far behind worldwide in terms of business competitiveness.”

The company stressed that for 2007 alone, Globe paid more than P15 billion in taxes to the National Government alone, not to mention other fees, as well as taxes to the local government units and other government agencies.

“Better tax administration and more efficient tax collection is the key, rather than the double or multiple taxation of those already overtaxed.  The tax burden must be shared equally and equitably,” it said.

Gordon, who chairs the committee on government corporations and public enterprises, has filed Senate Bill 2402 that seeks to create the Health and Education Acceleration Program (HEAP) Corp., a government corporation that will spearhead the rehabilitation and acceleration of education and health infrastructure in the country.

Under the HEAP, Gordon wants every commercial mobile service provider to remit to the HEAP Fund half or 50 percent of its net revenue earnings arising from local text messages.

Using 2007 estimates, Gordon noted hat there are nearly 54 million mobile phone subscribers in the country. Fifty percent share for every subscriber — who sends 10 average text messages a day — would translate to P269 million a day or a disposable fund of P98.5 billion annually.