No assurance of correct text taxes under metering

(Updated) The Philippine government will still be unable to assess correct taxes on text messages even if it acquires devices that will monitor short message services (SMS). This, among others, was pointed out by Globe Telecoms Inc., a day after the House Ways and Means Committee approved a bill imposing a five centavo tax on each text message, ringtone, icon, image, and multi-media service. It will be paid by mobile phone companies. Metering devices will not will not give the government better visibility into telco revenues, said Rodolfo Salalima, the company’s chief legal counsel and senior advisor. Although it can record “the absolute number of telecommunications transactions passing through a network," the device will be unable to determine the price of each message, Salalima said in a statement. “The metering device cannot determine and discriminate which SMS have prices versus the free and unlimited SMS. So it does not provide any revenue data at all for purposes of assessing the tax," he said. In the meantime, Smart Communications Inc., the Philippines’ leading mobile phone company, said the proposed tax will “destroy and obliterate text messages" that are either free or cost lower under its bucket pricing arrangement. The company – the mobile unit of the Philippine Long Distance Telephone Co. – said that 92 percent of its text messages fall under the “bucket pricing" arrangement. Under this pricing scheme – which benefits its low-income users – the average price of a text message is 11 centavos apiece. “The five centavo tax translates therefore, into a whopping 45.5 percent tax per SMS," Smart said in a statement. “Consumers can no longer expect to see bucket-priced plans including the very popular unlimited text plans if and when the SMS tax is imposed. SMS will revert to standard pricing which will not serve the needs of low income earners," Smart said. “[The] new tax will make these low prices unsustainable," Globe concurred. Twenty-five percent of Globe’s text messages are “either free or effectively zero-rated under unlimited or other offers; and only nine percent are rated at P1.00 per text," the company said. Both companies also criticized the government’s move to acquire the device. Globe said that the expense was “redundant and unnecessary" since it already has systems that measure traffic and revenue that the BIR [Bureau of Internal Revenue] has access to every time it wants to do an audit." Metering devices also exacerbate the danger that “data on a consumer’s life and lifestyle can be captured and housed where they may fall prey to public intrusion," Salalima added. The device “sends a serious chilling effect on the constitutional right to privacy of every individual. The technological capability of these “probes" should be extensively examined and scrutinized since this capability can be abused," Smart said. - GMANews.TV