Smart nixes tax on text

(COLUMN)

UPPERCUT

By: Albert B. Lacanlale

Smart Communications, Inc. (SMART) recently said that the consolidated bill approved by the House of Representatives imposing a tax on text and other services will hurt consumers, particularly low-income earners, who are heavy users of these services.

In a statement, SMART hit the three provisions of the consolidated House Bill which are: imposing a five centavo tax per SMS (short messaging service), MS (messaging service) and multi-media service (MMS); imposing five centavo tax per overseas dispatch, message or conversation transmitted from the Philippines; and, authorizing the National Telecommunication Commission (NTC) to acquire a metering device or portal which will interconnect the NTC, Bureau of Internal Revenue (BIR) and other concerned agencies with mobile phone service providers.

Ray C. Espinosa, head of the Regulatory Affairs and Policy Office of the Philippine Long Distance Telephone Company (PLDT) said the proposed tax on text “is objectionable because it will constitute a big burden on consumers and it comes at a time when the effective price of a text message has already significantly come down with the proliferation of bucket pricing which includes unlimited plans.”

In the case of the SMART Group, 92 percent of its SMS traffic is generated out of bucket-priced plans.

“Bucket-priced SMS plans, which include the very popular unlimited SMS plans, are the ‘pang-masa’ SMS offerings of the SMART Group. The average price of these bucket-priced SMS traffic is effectively 11 centavos per SMS. The 5 centavo tax translates, therefore, into a whopping 45.5 percent tax per SMS,” Espinosa said.

Bucket-priced SMS plans, which benefit most low-income earners, operate on the basis of either unlimited SMS or a pre-defined number of SMS traffic over a defined time period. These bucket-priced SMS plans now serve the basic communication needs of the country’s lowest income earners. SMS in this country, more than anywhere else in the world, has evolved into a basic and very affordable communication tool.

However, the imposition of the tax on SMS will destroy and obliterate the bucket-priced SMS plans since the tax is imposed on each SMS. Consumers, therefore, 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.

On this basis, the proposed tax on SMS is clearly anti-poor and anti-consumer.

THE TAX ON OVERSEAS CALL

The consolidated House Bill (as officially transmitted to SMART by the House Committee on Ways and Means) also imposes a 5 centavo tax on each overseas call made from the Philippines. Again, this is uncalled for and imposes a big burden on consumers, particularly the family and loved ones of our OFWs who need to stay in touch them. Sadly, this proposed tax comes in the aftermath of efforts of telephone companies to lower the price of overseas calls originating from the Philippines.

On this basis, the proposed tax on overseas calls is again clearly anti-poor and anti-consumer, and in particular, anti-OFW.

THE METERING DEVICE OR PORTAL

The installation of a “metering device or portal” which will interconnect the NTC, BIR and “other concerned agencies” with mobile phone service providers should be viewed with serious concern by all those in the private and public sectors.

While the “device” or “portal” is being pushed ostensibly to keep mobile phone service providers honest tax-wise, this “device” or “portal” is actually in the nature of a “probe” which, given recent technology advancements, is powerful enough to retrieve and store messages and allow these messages to be viewed and read. All messages, therefore, can be read by “concerned agencies.”

The capability of this “metering device” or “portal” to allow messages to be stored, retrieved, viewed, and read 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.

If the concern is to make sure that mobile phone service providers declare and pay correct taxes, there is already abundant monitoring being done today by the Bureau of Internal Revenue to ensure that taxes are properly declared and paid.