Tax local text messages, but not oil

HAVING won the May presidential election, President Gloria Macapagal-Arroyo is now hungrily looking for new tax revenue with which to fund government programs and to help reduce the country‚s burgeoning deficit.

With global crude oil prices at a record 45 dollars a barrel, Arroyo's plan to increase the excise tax on petroleum products couldn't have come at a worse time for Filipino consumers. Commentators keep pointing out that the Philippines has the lowest prices at the gasoline pump in all of Asia, as if that justifies hiking the tax on gasoline. The problem with hiking oil prices that consumers pay is that it has a knock-on effect that causes the prices of transportation, food and services to also increase, putting a disproportionate burden on the poor, who are affected the most negatively.

The government has also proposed a tax on text messages sent by mobile phone users. With 28 million cell phone users in the Philippines and an estimated 100 million text messages sent daily in the country, the proposed 20 centavo tax on each text message sent would yield 600 million pesos in revenue a month for the government. Not a bad sum.

A huge text protest last week, with "texters" sending messages of protest to the cell phone of House Speaker Jose de Venecia Jr., caused the government to back off from directly taxing each tax message. Instead the government said it would levy a franchise tax on telecommunications firms, dropping the 10-percent value-added tax it currently charges these firms. Both Globe Telecom and Smart Communications have promised to pass on this cost to cell phone users, despite both firms reporting record earnings and profits this past year.

Although both Smart and Globe are among the top taxpayers in the country, the government wants more of their profits. A closer look at their pricing structure reveals that local text message pricing is being kept artificially low at between one and three pesos for each message sent. International texts are much more expensive, with a text message sent to Saudi Arabia 25 pesos, and 15 pesos to the UAE. Clearly, international text messages are partially subsidizing domestic ones. In comparison, a local text message in Saudi costs seven pesos, while an international one costs only 9.8 pesos.

The families of OFWs in the Philippines are paying an exorbitant amount to keep in touch with their loved ones abroad, which is not fair. Telecom firms obviously make up for their low priced local text message fees with the sheer volume of text messages sent every day and in overcharging for international texts. Ideally, the price differential between local and international text messages should be much smaller than it currently is.

I think the government should go ahead and tax local text messages. Opponents of a tax on text messages say the affordability of text messaging has revolutionized communications among the poorer sections of society. I say yes it has, but it has also opened the floodgates to a torrent of stupid text jokes that most people would gladly live without if a tax on text messages caused senders to think twice before passing on silly text messages.

Mixed reaction to De Castro as OFW czar

THERE has been a mixed reaction among OFWs to the appointment of Vice President Noli de Castro as presidential adviser on OFW affairs, and as head of the Philippine Overseas Employment Administration (POEA) and the Overseas Workers Welfare Administration (OWWA).

Some OFWs have welcomed De Castro's appointment, believing his media experience has sensitized him to the problems of OFWs. Others have voiced doubts that the vice president will be able to be effective with so much on his plate.

I welcome De Castro's appointment to all of these posts. Too often in the past there have been turf wars between the POEA, OWWA, the Department of Labor and Employment, and the Department of Foreign Affairs. All are involved in taking care of Filipinos abroad and have overlapping jurisdictions. The consolidation of leadership of POEA and OWWA into the vice President's mandate should help both agencies run more smoothly.

Many OFWs will breathe a sigh of relief upon hearing that Labor Secretary Patricia Santo Tomas has been removed by President Arroyo from dealing with OFWs. She will now concentrate on domestic labor issues. Santo Tomas is still remembered for her central role in changing OWWA insurance rules so that OFWs abroad who had not renewed their OWWA membership were no longer eligible for any of OWWA's emergency services such as a ticket home or repatriation of remains if the OFW died abroad. Call it the nastification of OWWA rules, while gaining brownie points with Arroyo for saving the government money.

Whether De Castro is better at handling OFW affairs remains to be seen. OFWs can only hope and pray that their treatment will improve in the second Arroyo administration, but many will not be holding their breaths!

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Comments or questions? E-mail the author at rasheed@arabnews.com.