Tax not the poor texters

The urong-sulong hesitation of government to tax text messages reflects on its desperation to look for ways and means of increasing state revenue collections but at the same time being wary and sensitive to the backlash of protests from millions of Filipino "texters."

When the proposal was floated again last week (after several months of hiatus in deference to the election campaign), the reaction of 25 million Filipino cellular phone subscribers as gleaned from their text messages was enough to indicate the measure’s unpopularity.

Not a peep from telecommunication companies as they knew what to do with this tax imposition: pass it on to the consumers.

Taxing all short messaging services (SMS) would penalize even the productive uses of "texting." Although there are admittedly undesirable consequences of text messaging, i.e., students foregoing lunch for e-loads, variety shows soliciting audiences to participate in expensive "texting" games, not to mention text games that are really "disguised gambling" when scrutinized carefully.

Taxing The ‘Excesses’ Of Telecoms

Government needs to increase its tax revenues and some sectors are pointing out the "excessive" profits being made by telecommunications companies as possible source. Proof of these "excesses" is the industry’s wanton spending on advertisements in both broadcast and print media, plus the equally costly lavish marketing campaigns.

There are, though, a number of new revenue streams to explore, if the finance department is really looking. Among them is the unseen (or possibly undeclared) income from the unused portion of pre-paid cards discarded by users. And of course, the millions of dropped calls everyday that are automatically charged to cellphone users.

Regulators in government, however, should see to it that these additional taxes on telecoms "excesses" are not passed on to the consuming public via rate increase. Can the National Telecommunications Commission (NTC) hack this?

Tightening On Phone Dealers And Repair Shops

On another front, the NTC has drafted two circulars to regulate the products and services sold by cellular phone dealers and repair shops to prevent the trading of stolen cellular phones.

Dealers would be asked to register with the NTC their inventory of mobile phones and SIM cards. To ensure that the handsets are legitimate, the shop must give the Commission a monthly the list of the International Mobile Equipment Identity (IMEI) code.

The IMEI number serves as the serial number of the mobile unit, which is what the NTC normally asks when blocking stolen cellular phones. They must also submit a monthly sales and stock reports.

Repair shops would be asked to submit a list of their equipment like the digital multimeter and other electronic tools before they could register. Dealers and repair shops are required to properly identify their establishments by conspicuously posting signboards with a dimension of at least 50 by 100 centimeters.

Ineffective Implementation Breeds Corruption

Questions arise, however. Is the NTC capable of implementing effectively the new regulation? Does it have enough people to audit each of these shops and conduct spot checks to see if the establishments are complying with the regulation?

NTC may be solving some problems, but may at the same time create new more serious ones. A new layer of regulation could just spur another form of corruption involving NTC employees, similar to how internal revenue auditors "harass" taxpayers on the pretext that a tax fraud had been committed.

Personal interaction among enforcers and private businesses breeds corruption, which is what the BIR had been trying to avoid. This is the reason why the BIR had been relying more and more on its growing database to catch tax cheats rather than send its men to do spot checks.

Regulation without dogged implementation, however, is pretty much useless. There are still stores that sell pirated wares, and the authorities know exactly where these proliferate. Raids in these places have been ineffective as shown by experience when, after just a few days, illegal shops are back in business.

More Costs To Fry Small Fish

If NTC can effectively monitor and control the nefarious activities of phone dealers and repair shops, I’m sure the public would be happy. This would make unblocking of stolen cellphones a bit more difficult.

My concern, though, is that NTC may be expending its efforts and valuable resources to nitpick on the small fishes while the big ones get fatter and are treated with deference. In the meantime, the additional resources needed to execute the proposal would be an added burden on the government’s deficit situation.

Taxes, Corruption And Bir Issues On TV

‘Isyung Kalakalan at Iba Pa’ on IBC News (5 p.m. and 10:30 p.m., Monday to Friday) ends today with a discussion of issues concerning the Bureau of Internal Revenue and the challenges that confront it.

In the face of a mounting budget deficit, the government needs to seriously spruce up its collection efforts. The BIR – together with the customs bureau – faces some tough decisions as it attempts to professionalize its ranks through reorganization and computerization. But then, fundamental measures still need to be undertaken. Watch it.

‘Breaking Barriers’ With Business Leader M. V. Jacob

‘Breaking Barriers’ on IBC (11 p.m. every Wednesday) will feature Monico V. Jacob, former chairman and CEO of PNOC and Petron, and now chairman and CEO of several private firms engaged in providing educational services and job placements abroad.

Human resource is one of our competitive edges in a global economy. However, this resource must be educated, trained, and coached to do work that meets world standards. The cost of training and education, however, is now at levels beyond the reach of majority of our population.

The standard of public education, on the other hand, continues to deteriorate with the continued insufficiency of government funds allocated to education. As the quality of our human resources deteriorates, the threat that this competitive edge will eventually disappear becomes even more apparent.

What can private sector do to avert this impending disaster? Watch it.

Should you wish to share any insights, write me at Link Edge, 4th Floor, 156 Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. If you wish to view the previous columns, you may visit my website at http://bizlinks.linkedge.biz.