IMF chief: SMS tax could help Philippines

International Monetary Fund chief Christine Lagarde has urged the country to tax text messages to shore up state coffers in its bid to balance national budget.
Written by Ryan Huang, Contributor

International Monetary Fund chief Christine Lagarde has urged the Philippines to tax SMS (short message service) messages as an additional revenue stream to help balance the national budget.

The move could boost proceeds from revised "sin taxes" set to be passed by the country's parliament, Lagarde told a news conference during an overnight visit to Manila, according to an AFP report over the weekend.

She noted Philippine vice-president Jejomar Binay had told her the mobile phone penetration rate in the country of nearly 100 million people has reached to 112 percent, thanks to the popularity of using the handsets to send short messages cheaply.

"[This] clearly satisfies one of the two criteria for what we call a good taxation... a very broad base," she told reporters at the news conference.

The report noted surveys have credited the Philippines as being the most prolific country in sending SMS messages with the average mobile phone user sending 600 messages a month. Each message now costs just a peso (US$0.024), according to the article.

The Philippines is also the fastest growing smartphone market in Southeast Asia with a growth rate of 326 percent over the 12 months to September, according to data by GfK Asia.

However, a hugely unpopular bill to levy a five-centavo (US$0.0012) tax on SMS messages has already been defeated in parliament in 2009.

The Philippines is preparing to pass a "sin tax" as early as next week, in a bid to balance the national budget in 2016. It has said higher taxes on alcohol and tobacco could have the added benefit of tackling the health hazards of smoking.

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