Suspending The Tax On Text

Click to see source of the imageIn my recent blog about taxing text messages and monitoring the short message service (SMS) of cellular phone companies, I discussed about the approval of a house resolution imposing a 5-centavo tax for every text message by the House Committee on Ways and Means last September 8, 2009. Aside from the very bad effect of the proposed measure where the public may no longer enjoy unlimited text messaging if the proposed 5-centavo excise tax on SMS is implemented, the proposed tax measure will require the installation of a monitoring device which many fear could be used to make illegal surveillance of private persons not friendly to people in government.

All of the above fears are now gone temporarily because the House of Representatives reconsiders the tax on text messages and took a step back on the additional five-centavo levy due to “misunderstanding” on whether the consuming public will end up paying for the tax and the possibly because of the coming May 2010 elections. The congressmen decided to return the bill to the committee that approved it for “reconsideration” because the approved version of the bill has a pass-on provision.

Having a pass-on provision in the bill means the cellphone subscribers or the consuming public will shoulder the additional five-centavo tax on text messages. The return of the approved tax measure to the House Committee on Ways and Means is unusual but the the opposing congressmen said they want the committee to reconsider the bill to make sure that there is no pass-on to consumers.

The cellular phone companies who are strongly opposing the no pass-on provision said that “All taxes, except income tax, are passable to the public. Tax on text is a cost on business, a tax on production so why are telcos getting singled out?” The telcos justified their incapacity to shoulder the additional five-centavo tax by saying that cellphone companies are effectively charging consumers twenty-three (PhP0.23) centavos per text  only and that they supposedly have a mere two-centavo profit for each. text message. This means that if five-centavo excise tax is added, it would mean a three-centavo loss per text message for the cellphone companies.

We should be happy with these developments but one of the authors of the proposed additional five-centavo tax on text messages, Cong. Exequiel Javier warned that the bill is not dead. Javier said another hearing will be devoted to the bill. He added that the authors will be tasked to draft a new scheme. As such, we can only hope that they can think of a scheme where the additional tax will not be passed-on to us. Do you think they can find such a scheme?

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