Lawmaker: Plan to tax SMS is dead

<DIV><FONT face=Arial size=2> <TABLE cellSpacing=0 cellPadding=0 width="100%" border=0> <TBODY> <TR> <TD width="100%" height=10> <P class=mainhead>Lawmaker: Plan&nbsp; to tax SMS is dead</P></TD></TR> <TR> <TD width="100%" height=10> <P class=bodytext>By Max V. De Leon, <EM>MB Reporter</EM>&nbsp;<?XML:NAMESPACE PREFIX = O /><O:P> </O:P></P> <P class=bodytext>TEXTERS need not worry over the reported&nbsp; government move to tax short-messaging system (SMS) because the standby authority that would be given to President Arroyo to raise the value-added tax rate has killed the plan, administration lawmakers said.<O:P> </O:P></P> <P class=bodytext>Rep. Antonio Alvarez of Kampi said once the President uses the standby power, the 12-percent VAT rate should “shield texting from the long arm of the taxman.”<O:P> </O:P></P> <P class=bodytext>Earlier, the Department of Finance announced that it could revive the plan to impose a 20-percent excise tax on text messaging and soft drinks should the Congress fail to pass a 12-percent VAT rate.<O:P> </O:P></P> <P class=bodytext>This, the department reasoned, is due to the expected shortfall in revenues that a 10-percent VAT would result into.<O:P> </O:P></P> <P class=bodytext>However, Alvarez said the presidential standby authority to raise the VAT rate to 12 percent, “the plan of the finance department is no longer needed.”<O:P> </O:P></P> <P class=bodytext>Still, Alvarez said this does not mean that soda makers and telecommunication companies will not be made to contribute to the government’s drive to remedy the fiscal crisis.<O:P> </O:P></P> <P class=bodytext>This is because the government would be taxing them higher through the increase of corporate tax to 35 percent from 32 percent.<O:P> </O:P></P> <P class=bodytext>He said while the VAT rate is at 10 percent, these companies will be raising revenues for the government through the additional 3-percent corporate tax.<O:P> </O:P></P> <P class=bodytext>“And when the standby authority kicks in, it will be the consumers’ turn by paying a higher 12-percent VAT for their favorite sodas and text messaging,” Alvarez said.<O:P> </O:P></P> <P class=bodytext>This scenario, he said, is better than adding another layer of excise on the two products, as it would only whip up public opposition “which is the last thing that this government would need.”</P></TD></TR></TBODY></TABLE></FONT></DIV>