IMF wants gov’t to impose tax on text messaging

The International Monetary Fund (IMF) said it was critical for the Arroyo administration to implement short-term tax reforms to diversify its tax base, including the imposition of an excise tax on text messages.

Concluding a ten-day post-program monitoring review, the IMF mission headed by Joshua Felman presented its recommendations, saying that 2003 would be "challenging," compounded by the continued erosion of the government’s tax base.

To initiate the gradual diversification of the tax base, the IMF recommended as one of the short-term measures, the imposition of an excise tax on text messages.

The Philippines is the world’s biggest user of the short messaging service offered by telecom firms, generating a traffic of over 120 million text messages a day, bigger than the SMS traffic in the whole of Europe.

Industry data revealed that every day, each of the industry’s 40 million subscribers send an average of 8 to 10 SMS messages.

According to Felman, only the initial concept has so far been discussed and none of the actual mechanics of the proposed tax measure.