Proposed five centavo texting tax 'unconstitutional,' Globe says

Congressional moves to impose a five centavo tax on text messages without allowing telecommunication firms to pass it on to consumers are unconstitutional, the Philippines’ second-largest mobile phone company said. The provision in Ilocos Sur Rep. Eric Singson's House Bill 6625 – which prohibits mobile phone companies from passing on the said tax – goes against the law, Rodolfo Salalima, senior adviser and chief legal counsel of Globe Telecom Inc., said on Tuesday. "Ultimately the no pass-on provision is unconstitutional, and ultimately any attempt to tax the text will simply be passed on to consumers," Salalima said in a hearing of the House committee on Ways and Means. "This is again a case of crass legislation," Salalima added. Singson's measure proposes the collection of a P5-centavo tax "for every overseas dispatch, message, or conversation transmitted from the Philippines by telephone, telegraph, telewriter exchange, wireless and other communication equipment services which shall be paid by the service provider." The measure prohibits the direct or indirect passing-on of the tax payment to consumers, and directs the telcos to shoulder the costs. Lourdes Recente, director of the Finance department's research and information office, admitted that Singson's proposal poses some legal problems. "The tax that is being thought of is an indirect tax. So the issue of no pass-on is problematic," she said during the hearing. If approved, the tax would also translate to a three centavo loss for every text message, Salalima said, adding that Globe only gains a two-centavo profit from the average text message price of P23 centavos. He also questioned why telcos were being "singled out" as a source of additional revenues for the government, noting that President Gloria Macapagal Arroyo said in her State of the Nation Address last July that revenues can be generated from "sin" taxes on alcohol and tobacco products. While Globe has no problem with the intent of the bill – to generate funds for public education – there is no "valid basis" to impose the P5-centavo tax on telcos. "We have in effect no relation to education and yet we're being taxed for this," he said. The Globe official noted that his firm's objections to Singson's proposals are basically the same as the points he raised against Quezon Rep. Danilo Suarez's earlier proposal to impose a P5-centavo "broad spectrum fee" on text messages for information technology education. [See: Proposal seeks to charge telcos five centavos per text message] - GMANews.TV