Gov’t eyes tax on SMS to cover loss from oil tariff reduction

Trade Secretary Peter Favila on Wednesday said he personally favors a tax on text messages as a possible additional source of revenue in the light of proposals to scrap or suspend taxes on oil products. Favila said in an interview at Malacañang that imposing a tax on SMS could make Filipinos shift their focus on endeavors that are more productive. “Texting is also a source of negative reason...(and) it makes people more cynical," he said in an ambush interview shortly after the weekly press conference of Executive Secretary Eduardo Ermita. The Philippines has an estimated 48 million mobile phone subscribers, and industry estimates said they expect half of the 84 million population to own a handset by the end of next year. With a billion messages crossing mobile phone networks daily, the Philippines has been tagged as the "text capital" of the world. Text messaging is also cheaper than phone calls, making it the most popular way to keep in touch in the country. The government has been appealing to text-crazy Filipinos to be more careful in spreading or forwarding text messages containing rumors, especially on destabilization attempts. Favila said the tax on text has been floated a few years back and that Finance Secretary Margarito Teves is likely to support it. “That is within the ambit of the Department of Finance but knowing how Secretary Teves looks at things, any measure that brings in additional revenues could be supported by the DOF," he said. Calls to remove VAT ring louder Also Wednesday, senators said the one-percent tariff cut would not be enough to cushion the adverse effects in the Philippines of the rising prices of crude oil in the world market as calls for removal of the 12 percent Value Added Tax on oil rang loud in the Senate. Sen. Francis Escudero said President Gloria Macapagal Arroyo's slashing by one percent from the three percent tariff on oil – at an average 23 to 25 centavos per liter - "is only a drop in the oil barrel." “The cut doesn't quite make the cut in terms of cushioning the impact of high oil prices," he said. Because Mrs Arroyo "had dug her trenches" on the VAT issue, maintaining that the 12 percent levy on oil products will stay, "then she should have wiped out the whole three percent tariff on oil," Escudero said. Sen. Loren Legarda said that the oil tariff reduction was a stopgap measure at best, and is not expected to bring down the prices of petroleum products at the local pumps. "This is insufficient, ineffective and unsatisfactory," said Legarda, chairman of the Senate economic affairs committee. Legarda said that the one percent tariff cut would hardly be felt by the public, which has been reeling not only from rising transport prices, but also from the increasing costs of prime commodities. She said "transportation is a basic industry that cuts across all economic activities, such as manufacturing and agricultural production, and the marketing of basic goods like rice, vegetables and meat." As such, she said if the costs of transportation rise beyond the financial capacity of the great majority of the people, such a factor would cause greater sufferings and serious destabilization of society than man-made conspiracies. Fuel discounts Sen. Panfilo Lacson proposed a program to distribute fuel discount coupons to public utility drivers only, so that the maximum effect of the announced one percent tariff cut on oil products will benefit only those who need it most. Similarly, he called on the Philippine National Police leadership to intensify efforts to curb "kotong" and extortion activities, which victimize lowly drivers and transport operators. "We should come up with a package of measures, tax as well as non-tax, in order to alleviate the burden of our public utility drivers who are the hardest hit by the prevailing cost of oil in the world market", Lacson said. "Summit or no summit, common sense and political will should produce a package of measures and government interventions that would relieve our people from the anxieties of the unpredictable and increasingly difficult world oil market," Lacson said. Legarda said that the government "must tighten its belt and exempt fuel oil, including gasoline and diesel, from the 12 percent value added tax, even if only as an emergency measure. What we need now is to survive the energy crisis while preparing for a future of self-sufficiency in energy needs." "We must come up with long-term solutions because the clock is ticking on not only the country's, but the entire world's dependence on oil," Legarda said. Legarda instead urged the fast tracking of the country's adoption of alternative sources of energy to reduce its dependence on imported oil, which has already reached a record-high price of US$100 per barrel in the world market. She cited geothermal, solar, wind and water energy as very viable replacements to oil, especially for industries with very high-energy requirements. Sen. Manuel Roxas II and Escudero agreed with Legarda in urging the President to totally scrap VAT on oil, or at the very least adopt a "sliding VAT rate for oil," which would ordain lower VAT rates when oil prices are on the rise. "Malacañang’s intransigence on this matter shows that the much ballyhooed oil summit is all for show. It will be a scripted monologue because government will only be talking to itself," Escudero said. Escudero said the President should start thinking outside of the barrel if she so desires to provide an act of solidarity with the people who are reeling from expensive oil, he said. "If the motive of reducing the tariff on oil is to signal the President's concern on rising oil prices, then it clearly fell short of its target because a one percent cut, by any standard is unalloyed tokenism," Escudero said. He said the "math on oil would show that foregone revenues from the complete scrapping of the tariff on oil will be recouped by the government from the windfall in VAT she so dearly loves." Roxas said the government must work harder on increasing tax collection efficiency before shunning his proposal to suspend the value-added tax on oil products, on revenue concerns. “First of all, the government can make the collections much more efficient. Second, why are they passing on to us the problem of their ineffectivity, their inability to perform their duty?" Roxas said. “They say they can’t do their task and keep collecting VAT on oil products. Let’s turn this equation a bit: Do your job well, give back to us our money, because we need it at this time," he added. Roxas said the basic principle in calling for the suspension of VAT on oil products was: “This is not government’s money. This is the people’s money. People are going to spend this, and when they do, the government will get it back anyway. The only challenge to government is to do what it ought to do anyway, which is to be an efficient collector of the tax." “We have here something that the government can do – remove the VAT on petroleum products. In effect, we pump P4 with each liter of diesel, P65 with each 11-kilo LPG tank, back into the economy, and give our people much needed relief," he said. - GMANews.TV