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Philippine SMS tax 'burden' and 'dangerous'

Country's lobbyist groups and carriers strongly oppose government-proposed tax on SMS messages, saying it will increase communications cost.
Written by Joel D. Pinaroc, Contributor on

Lobbyist groups and mobile carriers in the Philippines have expressed strong opposition against a scheme to impose additional taxes on short messaging service (SMS) or text messages.

Philippine Congress last week approved a scheme to impose a 0.50 centavo (US$0.01) tax on individual SMS or text, but concerned groups said the bill could raise rates of mobile services as carriers will likely pass on the added costs to consumers.

In a statement Sunday, the Blas F. Ople Policy Center, a non-government organization dealing with migration and labor laws, slammed the tax scheme, saying "it will severely affect Overseas Filipino Workers (OFWs)". It added that the tax will be a "burden" to OFWs as the global economy continues to struggle.

SMS is one of the most popular and cheapest ways of communication for millions of OFWS based around the world, the center said. Even with a "no pass-on" provision in the bill, prohibiting operators from transferring the cost to consumers, the Ople Center said consumers will still have to shoulder the added cost.

Local telcos also argued that the "no pass-on" condition is unconstitutional, noting that the country's existing legislation allows all taxes, with the exception of income tax, to be passable to consumers.

The Ople Center urged for more deliberations and consultations between the Philippine government and labor and OFW groups.

Consumer advocacy group TXTmate echoed similar sentiments, saying the tax scheme is a "dangerous measure" that would not address the real problem of some 70 million cellular phone users in the country, which is high access costs.

In a statement Sunday, TXTmate said it would be "easy for the telcos to reallocate or reclassify the additional expense to another cryptic technical category".

Supporters say schools benefit
However, proponents of the tax scheme said this will not be the case.

Quezon Representative Danilo Suarez, the main author of the bill, said the tax will be shouldered by the operators, according to local news site Inquirer.net.

The lawmaker said the additional tax will generate at least 20 billion pesos (US$415.5 million) a year for the government, where the funds can be used to support computer literacy program of public schools across the archipelago.

Plans to introduce the SMS tax have been deliberated in Congress since 1997, although mention of such schemes emerged as early as 1995 when the Philippines emerged as the texting capital of the world.

Mobile carriers, meanwhile, have also voiced their opposition to the tax scheme. The country's top two carriers--Smart Communications and Globe Telecom--said the bill will affect popular services such as "unlimited texting", a popular service that allows users to send an unlimited number of SMS messages within a specified period of time, for a minimal fee.

In separate report, Smart said the SMS tax, if implemented, may hinder the company's expansion plans.

Both carriers, however, have yet to say if the levy will affect current SMS rates.

Joel D. Pinaroc is a Filipino freelance IT writer currently based in Saudi Arabia.

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