House panel recalls text tax

MANILA, Philippines - The House ways and means committee recalled yesterday its approval of the proposed five-centavo tax on text messages after telecommunications companies (telcos) and consumer groups raised howls of protest.

Opposition Rep. Rufus Rodriguez moved for the recall of the measure “for the purpose of more public hearings so we can hear even representatives of our overseas workers who will be burdened by this proposed text tax.”

“Let us hear consumer groups with members both here and abroad.

 Let us hear the telcos, which are complaining of alleged lack of due process,” he said.

The committee, chaired by Antique Rep. Exequiel Javier, then proceeded to listen to representatives of telcos, consumer groups and concerned government agencies.

Speaker Prospero Nograles’ objection to the committee-approved pass-on provision might have also prompted the committee to agree to the bill’s recall.

Globe Telecom legal counsel Rodolfo Salalima told the panel that he and other telco representatives were surprised to read in the committee’s “substitute bill” that their companies would be prohibited from passing on the proposed tax to their subscribers.

He said Javier has told journalists that the tax would be a business cost that mobile phone companies would be allowed to include in their subscribers’ monthly bills.

He said telcos would surely pass the levy on to the public if Congress imposes it.

“Let us not deceive the public on this no-pass through provision. Why are we testing the nerves and sensitivity of our people?” a visibly angry Salalima asked, stunning some members of the panel

when he raised his voice.

Rodriguez supported Salalima’s account of how the Javier committee made a complete turnaround on the no-pass on provision.

“I was the only one who voted against this bill in our Sept. 8 meeting because of your decision to let subscribers absorb the proposed five-centavo tax,” Rodriguez said, addressing Javier.

He said he had also raised concerns about possible violation of privacy laws, as well as about unequal taxation.

He said under the metering proposal, the Bureau of Internal Revenue and the National Telecommunications Commission would have data on text messages and voice calls.

Javier clarified that the two agencies would only monitor the number of calls and messages for taxation purposes, and not their contents.

“Besides, under the Anti-Wiretapping Law, these agencies and even telcos are prohibited from releasing information about private communications like text messages and voice calls,” he said.

Anthony Cruz, who heads a group of mobile phone users called Textpower, told the committee that messages and calls are now levied two kinds of taxes.

“These are the value added tax, which you increased from 10 percent to 12 percent, and the 10-percent overseas communications tax. The proposed five-percent impost would be a third levy,” he said.

He said his group believes more the telcos’ statement that they would pass on the tax to their subscribers than the lawmakers’ no-pass on assurance.

Cruz also urged House members to use their pork barrel funds for education-related projects that they want financed out of the proposed text levy.

But Bacolod City Rep. Monico Puentevella objected to Cruz’s proposal, saying lawmakers need such funds now that next year’s elections are fast approaching.

“We need that so we can gain votes. Every school building we fund, we gain votes,” he said.

Rep. Teodoro Casiño of the party-list group Bayan Muna said text messaging should be a free service of telcos.

Responding to Casiño’s questions, officials of the Department of Finance said they could not assure that revenue agencies would be able to enforce a no-pass on provision. 

Operating at a loss

In a position paper, Globe’s Salalima said taxing texts would leave them operating at a loss.

“Our profit for every 23-centavo text is only two centavos. Impose a five-centavo tax on a 23-centavo text, we lose three centavos per 23-centavo text. Government cannot dictate that business operates below its cost of production and at a loss,” he said.

“The Department of Finance (DOF), through Undersecretary Gil Beltran, has virtually disowned this tax on text, saying that the idea to revive the proposed tax on text did not come from the DOF, while Albay Gov. Joey Salceda, one of the Palace’s economic advisers, was more graphic, limpid and scathing in his attacks on the tax on text,” Salalima said. “So where go our logic and mathematics in proposing this consolidated bill?”

“The public will be doubly taxed for the reason that the value-added tax (VAT) on text will likewise increase because the tax on the text will now become a part of the base for VAT computation,” Globe emphasized.

“At the last hearing prior to Sept. 22, the consolidated bill, to our surprise, was approved by the committee without the telco industry being properly notified of the said hearing,” Salalima said. “Worse, the consumers, the mass public, were never invited at all on all the hearings of this tax-on-text proposal when they will be most adversely affected. And during those hearings before the committee, there were only two who spoke/defended the proposed tax measure while the rest, the likes of Reps. Monico Puentevella, Teodoro Casiño, Giordigi Aggabao, Rufus Rodriguez, Jesus Crispin Remulla and Roilo Golez, were either questioning or opposing the proposals of Reps. Suarez and Singson,” he said. – With Mary Ann Reyes