House panel approves 5-centavo tax per text message

MANILA, Philippines - The House ways and means committee approved yesterday a proposal to impose a five-centavo tax on text messages.

Antique Rep. Exequiel Javier, committee chairman, told reporters that it is the millions of cellular phone subscribers, not telecommunications companies (telcos), who will absorb the proposed tax.

“This is a pass-on levy, since it is a business cost. Otherwise, it is business (referring to telcos) that will suffer,” he said.

But the approved measure is likely to face rough sailing in the plenary as Speaker Prospero Nograles expressed his opposition to taxing text messages.

“We will not allow any such additional taxes on the shoulders of the public,” Nograles said.

Javier said the proposed tax would make cellular phone subscribers poorer by P36 billion a year.

He said proceeds from the levy would be used exclusively for education.

He added that his committee would submit its report to the House next week and that he expects the chamber to approve his panel’s recommendation soon.

Two congressmen, Eric Singson of Ilocos Sur and Danilo Suarez of Quezon, introduced similar bills on the imposition of a five-centavo text tax.

However, what the Javier committee approved was a simplified version of Singson’s proposal.

Singson had hoped his text tax bill would serve as an alternative to raising taxes on cigarettes and liquor, or the so-called sin products.

Singson and other Northern Luzon congressmen, with Javier as an ally, have opposed higher sin taxes, citing dire repercussions on the tobacco industry, particularly a possible displacement of thousands of farmers.

The Quezon congressman’s version of the text tax bill was more complicated but appeared to be more subscriber-friendly.

He proposed the setting of a 50-centavo cap on the cost of text messages. He claims that at present, telcos charge as much as P1 for every text message vis-à-vis cost of less than 10 centavos.

His suggested price ceiling would already include the five-centavo text messaging tax. Thus, he argued that the tax would be borne by telcos.

Also part of Suarez’s bill is the metering of the revenues of cellular phone companies.

Suarez, who has expressed suspicion that these companies are cheating on their taxes by understating their gross revenues, said the planned metering device would be like an electric consumption meter.

Speaker not in favor

In voicing opposition to taxing text messages, Nograles said raising revenues to support development programs should not severely burden the public.

“It’s very clear that based on our previous hearings, there is no need to increase cost on the SMS (short messaging system) service of our telecommunications because the P1 per text that is being charged is more than enough to cover the five-centavo tax for each text,” he said.

Based on lawmakers’ estimate, the Speaker said telcos like Smart, Globe and Sun Cellular will be raking in billions in pesos, or around 50 centavos per text message sent, out of the millions of text messages being sent daily.

“There will be no additional cost on texting. So instead of cutting down on the cost of texting, telcos should allocate at least 20 percent of their profits to a trust fund for education and health care,” Nograles proposed.

“It is my position that the proposed additional tax on text will be borne by the service providers and that the consumers will not be paying additional costs for texting,” the Speaker added.

Senators Ramon Revilla Jr. and Panfilo Lacson, chairpersons of the public services and ways and means committees, respectively, said they would not agree to the proposal if the taxes would be passed on to consumers.

“I reiterate my opposition to the imposition of additional taxes on texting that will be shouldered by subscribers. Texting has developed to be the cheapest and most accessible means of communication, and new taxes imposed to the to the public will definitely burden them,” Revilla said. – With Delon Porcalla and Aurea Calica