Not just sin, SMS tax good revenue source too – IMF chief

MANILA, Philippines – Taxing mobile phone messages will help boost state funds in the Philippines, dubbed the world’s texting capital, International Monetary Fund (IMF) chief Christine Lagarde said on Friday, November 16.

In a press conference in Malacañang, Lagarde said proceeds from the SMS (short messaging system) will be another good revenue source for the Philippine government, aside from improved sin taxes, which are set to be passed by the Senate soon.

Lagarde said Vice President Jejomar Binay told her telephone coverage in the country of nearly 100 million people has reached 112%, thanks to the popularity of mobile phones for sending SMS cheaply.

“(This) clearly satisfies one of the two criteria for what we call a good taxation… a very broad base,” she told reporters.

Surveys have credited the Philippines as being the most prolific country in sending SMS messages with the average mobile phone user sending 600 messages a month. Each message now costs just a peso (2.40 US cents).

A hugely unpopular bill to levy a 5-centavo tax on SMS messages has already been defeated in Congress in 2009.

The government, which hopes to balance the national budget in 2016, instead turned to proposing higher taxes on alcohol and tobacco, which would have the added benefit of combating the health hazards of smoking.

Sin taxes by Nov 19?

Senator Franklin Drilon, chair of the Senate ways and means committee and sponsor of the sin tax bill, is confident the measure will be passed by Monday, November 19.

“If the so-called sin tax [bill] is voted on on Monday, that will be great progress for the revenue collection of the country,” said Lagarde.

“Now, what matters of course is the possibility to raise revenue in as transparent a way as possible, with as much distributive effect as possible as well,” she added.

Drilon’s bill seeks to raise P40 billion in additional revenues from higher taxes on alcohol and tobacco products. This is higher than the P15 billion to P20 billion earlier proposed by his predecessor, former ways and means committee chair, Senator Ralph Recto. This is also closer to the P60 billion that the executive branch wants. – Rappler.com, with a report from Agence France-Presse