Group bucks proposed 10% tax on cellphone firms

The Philippine Electronic and Telecommunications Federation (Petef) has branded as "unconstitutional" a move by Congress to impose a 10 percent tax on cellular phone operators to give the government at least P7 billion in additional income annually.

Rodolfo Salalima, Petef president and Globe Telecom senior vice president for legal and corporate affairs, said that the proposed measure violates equal protection of law since only mobile phone companies are being singled out to pay the tax.

"Telecommunications is considered a basic service just like fuel and water, therefore, it should not be unnecessarily taxed. Besides, we are already overtaxed by the government," he pointed out.

Besides, Salalima said that the carriers cannot abide by the bill's provision that they should not pass on the additional charges of the subscribers.

He explained the Court of Appeals already ruled in a similar case involving the Manila Electric Co. (Meralco) that it is wrong for companies not to make the customers pay for whatever additional operating expenses they may incur.

"Under the said ruling, all public utilities may indirectly transfer the tax they paid to the public not as a tax but as cost of production," he said.

Salalima said that the view is shared by Smart Communications Inc. and Isla Communications Co. (Islacom).

House Bill 8278 authored by LAMP Rep. Danilo Suarez of Quezon aims to levy a 10 percent tax on gross receipts of cellular phone companies in addition to the income tax and 10 percent value added tax.

The proceeds would be earmarked as a special computer literacy education fund for public elementary and high schools.

The tax proposal was the result of alleged poor service being rendered by the mobile phone companies which should be made to compensate the public by paying the additional tax.

On the other hand, the National Telecommunications Commission (NTC) said that the operators have no recourse but to follow the law in case the bill is passed.