Camacho shoots down tax on text

Finance Secretary Jose Isidro Camacho turned down yesterday the proposal of the International Monetary Fund (IMF) to impose excise tax on text messages in order to raise substantial revenues for the government in the face of its widening budget deficit.

Camacho said that the IMF cannot insist on it since the Philippines is not under any IMF economic program where the government is bound to comply with its fiscal prescriptions.

"We are a sovereign country so we cannot accept any suggestion as an order," he said in an interview over radio station dzMM. "This was just a suggestion on their part to help us solve our fiscal deficit because we really need to raise government revenues," he added.

Short Messaging Service (SMS) or text messaging is very popular in the Philippines and the country’s estimated 40 million cellphone users are generating a traffic of over 120 million text messages a day, bigger than the SMS traffic in Europe.

Camacho himself admitted that the proposed tax on text could be a veritable source of additional revenues for the government which has been reeling under the pressure of low tax collections this year from the Bureau of Internal Revenue and the Bureau of Customs.

But the finance chief stressed that while he supports any measure that would increase the government’s revenue base, he believes that the IMF proposal would have the effect of discouraging the use of this popular and cheap mode of communications in the country today.

Press Secretary Ignacio Bunye disclosed that the Palace would support Camacho’s position in this issue as taxation is really under the jurisdiction of the Department of Finance.

In the Senate, Senators Edgardo Angara, Aquilino Pimentel and Manny Villar also opposed the IMF proposal. Angara said that the proposed tax on text would provide a financial barrier on the Filipino’s right to communicate.

He said that if text messages are taxed, telecommunications companies would pass on the added cost to texters, making the service more costly.

Pimentel suggested that government should instead regulate the sale of prepaid cards. – With Efren Danao and Katherine Adraneda