Philippines Considers Tax on Text
By Eric Lin, Fri Mar 26 22:15:00 GMT 2004

Virtually every nation is operating at a deficit these days. Every government is trying to find new sources of income in these tough times, but the Philippines may be the first place to turn to text messaging.

The Philippine Government was 200 billion pesos in debt last year, and they can't seem to agree on any more budget cuts. INQ7 reports that now they are investigating a tax on text messages as one way to generate more revenue. A tax of one centavo per message could generate 500 million pesos per year. The sheer popularity of SMS makes it a tempting target, but taxing texters is not going to be an easy fix. The two major pre-paid carriers in the Philippines, Globe and Philippine Long Distance Telephone both oppose the tax, and they have good grounds for a fight.

Pre-paid cards are already subject to VAT (sales tax), so texters would be paying double tax, one on the card and one on each message sent if the tax were approved. In addition, while the proposal currently taxes SMS, there is no proposal for phone calls. Is it fair to double charge texters, but not callers? The government is trying to justify the double tax by calling the per message charge an excise tax, but in the Philippines, this is normally reserved for unhealthy items such as alcohol or tobacco. It would be interesting if the government justifies this convention by naming texting as a health risk.

Though the justification for a per message charge is totally different here, we can't help but think about Bill Gates' proposal that the sender of each email be forced to pay a small charge similar to postage to reduce spam. That plan is also continually rejected, partially for similar reasons. We already pay for internet access, so we don't want to pay an additional fee for email. They can't call it a tax, because our internet service fees are already taxed as well. Unless messaging uses a completely separate network from other communications, per message taxes will never be successful, because people will simply use other modes of communication on the same network. Which brings up the one positive result we can think of if the Philippino Governement goes ahead with its plan- we should see some creative new messaging applications using alternative protocols.