Gov’t mulls tax on text messages anew

MANILA, Philippines – The government may attempt to revive plans to impose a tax on text messages as it searches for other ways to raise revenue amid a looming passage of a bill raising the tax exemption cap for 13th month bonuses.

The country is estimated to lose between P40 billion and P60 billion in revenues if the bill is passed.

On the sidelines of the Aquino administration’s mid-year economic briefing yesterday, Finance Undersecretary Jeremias Paul said there should be an alternative revenue measure to allow the government to recover the revenue lost due to reduced income tax collection. 

Tax on text messages is among a range of options being considered, he said.

“That is in the pipeline. But on how to implement it is another issue. This is something that needs to be discussed with lawmakers and affected parties,” Paul pointed out.

“We have been very vocal about our position that any measure that results in losses for the government must be replaced with an alternative revenue measure,” he said.

Lawmakers earlier said they are considering the passage of bills imposing excise taxes on carbonated drinks and mining activities as alternative sources of revenue for the government.

“The proposal that seeks to tax carbonated drinks did not come from us. It came from lawmakers,” Paul explained.

Bills seeking to levy a tax for all text messages and pictures, and video and audio clips sent through mobile phones, were filed as early as 2009 to help plug the yawning budget deficit. However, these proposals failed to take off due to strong opposition, mostly from consumers, telecommunications companies and Filipinos living and working abroad.

Filipinos rejected the tax proposal that said would be regressive and impact more on the lower income bracket than the wealthy.

The Philippines, with a population of 100 million, is tagged as the text capital of the world, with the average mobile phone user sending 600 messages a month. A short message service (SMS) costs at least P1.

International Monetary Fund chief Christine Lagarde earlier urged the government to tax text messages to boost state coffers to help balance the national budget. 

The move could supplement proceeds from revised taxes on sin tax products, Lagarde said.

Lagarde noted the “broad base” of text messaging in the Philippines, with over 102 million subscriptions, which makes it a candidate for “good taxation.”

Some observers, however, said the mobile phone firms may still pass on the additional costs to subscribers, which could spell the end of traditional text messaging.