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SMART
Communications Inc., the country’s largest mobile phone
service provider, on Thursday said the government should
find ways to reduce taxes on the use of mobile phones
rather than impose new levies.
The
cellular firm said this will lead to a hike in mobile
penetration and even help increase annual growth in
gross domestic product (GDP).
Citing a
report entitled Global Mobile Tax Review published by
the GSM Association in partnership with Deloitte
Consulting, Smart said tax regimes that recognize mobile
phones as a need and not a luxury benefit all
stakeholders.
“Reducing mobile specific taxes and general consumer
taxes such as VAT (value-added taxes) leads to
substantial increases in mobile penetration and usage
and a reduction in the price charged to the end
consumer,” Smart senior regulatory manager Roy Ibay
said.
This
latest report analyzes the impact of reducing consumer
taxes on mobile services by considering the impact of
tax charges on a reduction in the price charged to
consumer, on mobile penetration and usage, and on tax
revenues and GDP.
From a
sample of 57 developing countries, the report finds that
a 10-percent increase in mobile penetration leads to a
1.2-percent hike in the annual growth rate of GDP.
“Mobile
phones are revolutionizing the lives of millions of
people and will continue to be the primary means for the
great majority to access voice, data and Internet
services. This report makes the case for addressing
taxation policy and levels to support the extension of
this essential franchise to the poorer sections of
society,” the Smart lawyer pointed out.
The
country currently has a 60-percent telephone density
rate, the portion of the population with access to a
telephone.
The
report, which was released early 2008, noted that a
reduction in mobile specific taxation could approach
revenue neutrality in these countries, as the expected
cut in tax revenue would be counterbalanced by higher
VAT, corporation tax and economic growth.
Of the
countries involved in the surveyed, 16 have mobile
specific taxes. “Such taxes are regressive in developing
countries, in that they are proportionally greater on
the poorer members of society who use mobile phones as
their source of universal access,” added Ibay.
Smart,
like its rival Globe Telecom, strongly opposed the
proposed measure of Sen. Richard Gordon and supported by
House Speaker Prospero Nograles that will require the
cellular firm to remit half of its earnings from text
messages to government coffers. According to the
senator, proceeds from the new levy will be used to
provide additional support and improve the status of
health and educational facilities in the country.
Smart
pointed out that not only has Senate Bill 2402 proposes
an increase in SMS (short message service) prices but is
against the government’s universal access program and
call for lowering the prices.
“If we
return to the old rate of P1 per SMS, regardless of the
transaction, it will be regressive and counterproductive
and will deter the growth of the telephone density in
the country and much less restrict communications all
across the sectors due to prohibitive costs,” said Ibay.
The
imposition of SB 2402, said Ibay, paints the picture
that the government’s tax policy is “whimsical and
unpredictable” and punishes successful commercial
investments through the tax on perceived huge revenues
of the SMS providers. “This sends the wrong message to
potential investors. Our government should not send the
wrong signal that would turn away prospective investors
especially now that the global economy is in turmoil and
the need to attract more investments in our country is
needed for economic survival,” Ibay said in a letter
to Gordon. |
