DOF explores ways of raising revenue from telecoms

Finance Secretary Juanita Amatong confirmed yesterday that the Department of Finance continues to explore ways of raising new revenues from telecommunications while sparing consumers from any additional cost.

"The proposed tax on telecom companies has not been withdrawn by the executive branch and there has been no flip-flopping on this matter," Amatong said in a press statement.

She stressed that the Department of Finance (DOF) intends to pursue its proposal for new revenues from the telecommunications sector in partnership with Congress.

"An equitable tax on telecommunications companies continues to be in the priority legislative agenda of the administration, although it has been placed in the short-term backburner in favor of more practical and feasible tax measures that would respond to the Congressional calendar and the need to quickly put our fiscal house in order," Amatong said.

Speaking in behalf of the DOF, Finance Undersecretary Grace Tan confirmed that while hearings at the House of Representatives on the proposed tax on telcom firms have been shelved, the DOF continues to study the matter of raising revenues through a new tax on telecommunications.

The DOF, in a presentation before the House committee on ways and means on Dec. 2, expressed reservations on the proposed reimposition of the franchise tax on telcos in lieu of the VAT.

"We have reservations on the proposed reimposition of the franchise tax on telcos in lieu of the VAT because this would result in lower tax revenues for government," Tan said.

She said the exemption of telcom firms from VAT would create distortions in the VAT system and be inconsistent with present government directions to broaden the VAT base by streamlining and reducing exemptions.

Amatong expressed optimism on an acceptable approach to a tax on telecommunications, which the DOF intends to pursue with full consultations with the private sector, consumer groups and members of Congress.