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Why is Text Tax the Philippines’ Gateway to Hell?

October 1, 2009

THE Arroyo government is not telling the real reason why it wants to tax telecommunication companies. The somnambulist

A tax on your freedom...

A tax on your freedom...

slaves of  Gloria Arroyo in Congress have no intention to disclose the actual motive behind their proposition to impose a 5 to 10-centavo tax on text, multimedia messages and phone calls. Instead, most pro-administration congressmen, particularly Ilocos Sur Rep. Eric Singson, Quezon Rep. Danilo Suarez who is applying for a one-billion peso loan from a government bank, and Antique Rep. Exequiel Javier, prattle on about the many public welfare benefits that may be realized from their text tax proposal.

They mentioned about education projects and other nice-to-hear welfare state boons that would be funded by the government if their bill were enacted into law. Some senators were not so explicit in their position on the text tax bill. Sen. Panfilo Lacson said the Senate might support the bill if “there’s no pass-on to consumers.” Sen. Ramon Revilla, Jr. simply flip-flopped, saying that the funds from the tax “to be plowed to education and other services are vital,” but agreed that that the public must not shoulder “a new burden.”

House bill 6625, authored by Singson, seeks to impose an excise tax on every SMS and MMS sent from cellphones. It was approved on September 8, 2009 by the House’s ways and means committee, but has been temporarily set aside for further deliberations since most politicians suggested the insertion of no ‘pass-on’ provision in the guise of protecting consumers. A no pass-on provision means consumers will not shoulder the proposed tax. But who will pay the tax? The telecommunication companies will be the ones to pay 5 to 10 centavos per text.

They want us to believe that their text tax proposal is for the good of the people.

The Arroyo government is trying to tilt our heads away from the main issue. They want us to believe that their text tax proposal is for the good of the people. The bill’s proponents argue that the money to be siphoned from the telecommunication companies would go to education and other welfare state projects. The money would be used for the improvement of our dilapidated classrooms so why bother? It will not be passed on to consumers, so why complain? These are the mental conditioning processes that this administration would want us to accept on faith—that questions and opposition are to be ignored if their policies were intended for the common good.

Go figure...

Go figure...

The main issue here is corruption. Text tax is not supposed to be a purely legal matter; it is a moral issue. The main question is whether the government has the right to tax a successful industry for the sake of what it calls the common good.  No one from the government admits that since Mrs. Arroyo came to power via people’s revolt in 2001, the Philippine government has accumulated a total debt of P4.2 trillion. A student of Keynesian economics, Arroyo is to be regarded as  the queen of government spending. In just eight years, the Arroyo regime has contracted more than two trillion peso-debt from foreign creditors at exorbitant interests. But where did the money go?

But their agenda is plain and simple, they want to advertise themselves as the people’s savior…

In 2006 alone, the government has incurred a loan amounting to P491 billion that generated an interest of P292.9 billion, or a total of P784.5 billion. Certainly, Mrs. Arroyo beat former presidents Joseph Estrada, Fidel Ramos and Corazon Aquino in the debt race. Mrs. Arroyo is perceived as the most corrupt president of the country, outclassing dictator Ferdinand Marcos. After her controversial reelection in 2004, Mrs. Arroyo was linked to vote rigging and numerous scandals, like the P750 or so million fertilizer scam, Piatco scandal, multi-billion ZTE deal, etc. (I need to write a book to document Mrs. Arroyo’s kleptomaniac regime).

Since Mrs. Arroyo is a student of monetarist school and Keynesian economics, her government policy seems to have centered on government spending and borrowing. Excessive government spending, borrowing and printing too much paper money to dilute the money supply are the symptoms of the school of monetarism and Keynesian economics, and Mrs. Arroyo got a grade of A in this regard.

If the United States under Barack Obama, another devoted student of monetarism and Keynesian economics, turned to the American taxpayers for two or so trillion dollar bailout, the Arroyo government now attempts the trick the people into believing that it is only after the successful and ‘greedy’ telecommunication companies. There’s no pass-on provision, they say, so there’s nothing to worry about.

I say this text tax bill is anti-poor and anti-capitalism. Mrs. Arroyo and her cohorts try to make it appear that it is okay to sacrifice the successful if their intention is to serve the common good. They try to fake reality by making the people believe that their action is for the benefit of the people. But their agenda is plain and simple, they want to advertise themselves as the people’s savior when in truth and in fact it is their stupid policies that brought all of us to an Orwellian world. Remember, the road to hell is paved with good intentions.

A dictator who attempts to cheat reality will only find his/her own destruction— and that of the whole nation.

A dictator who attempts to cheat reality will only find his/her own destruction— and that of the whole nation. Legal principles mandate that taxation must be uniform and must not single out a particular class of people or industry. Under the bill, the government seeks to punish a single industry—the telecommunication industry. Our politicians find no fault or evil in their agenda in trying to tax these companies simply because they are successful. And because they are successful, they must contribute monetary resource to the already bankrupt government for the benefit of the people. This mentality best evokes Karl Marx evil design— “from each according to his ability, to each according to his need.”

If the Arroyo administration were concerned enough with the plight of our educational system and of the people, then it must also have the guts to admit that it needs money for its welfare state projects simply because it has gone bankrupt due to corruption and because foreign creditors like the International Monetary Fund (IMF) has already sent their ultimatum— tax your people or no loan.

Since Mrs. Arroyo is a student of monetarist school and Keynesian economics, her government policy seems to have centered on government spending and borrowing.

How is it possible for telecommunication companies to survive if it altruistically shouldered every 5 to 10-centavo tax of its subscribers? Under this evil system, the most successful among the telecommunication companies would pay more simply because they have more subscribers. As a result, there will be no unlimited texting to discourage subscribers from engaging in text-spree. There are only two options for these companies if the text tax bill were passed into law— go bankrupt or surreptitiously or creatively pass the burden on to its subscribers. This situation reminds me of the housing crisis in the United States, wherein laws (Community Reinvestment Act, etc.) were passed to legally coerce banks into lending money to borrowers regardless of the latter’s economic status and ability to pay. Today America now experiences recession because of the miscalculated and altruistic policies of its own government. However, the worst injustice of all is that most people, particularly the so-called intellectuals led by Noam Chomsky and Michael Moore and academic prattle, blame capitalism instead of government intervention for the economic crisis.

The same American experience will also happen to us should the lawmakers and Mrs. Arroyo succeed in turning this evil bill into law. To survive, telecommunication companies need to find ways to try to transfer the tax burden to their subscribers. I cannot imagine the grim consequences if the telecommunication industry failed to survive. If they go bankrupt, the country’s economy will greatly suffer.

This evil tax proposal of the administration is at best self-defeating. It is self-defeating in the sense that it will drive investors away from our shores.

This evil tax proposal of the administration is at best self-defeating. It is self-defeating in the sense that it will drive investors away from our shores. No rational capitalist in his right mind is willing to be immolated by a regime that does nothing but impose impediments. If the government wants to fix its worsening bankruptcy, it must start to decontrol now and let the men of ability mind their own business. The only economic system that can save our collectivized nation is capitalism. To end this, I’d like to add a quote from my favorite book Atlas Shrugged:

“In the name of the best within you, do not sacrifice this world to those who are its worst. In the name of the values that keep you alive, do not let your vision of man be distorted by the ugly, the cowardly, the mindless in those who have never achieved his title. Do not lose your knowledge that man’s proper estate is an upright posture, an intransigent mind and a step that travels unlimited roads. Do not let your fire go out, spark by irreplaceable spark, in the hopeless swamps of the approximate, the not-quite, the not-yet, the not-at-all. Do not let the hero in your soul perish, in lonely frustration for the life you deserved, but have never been able to reach. Check your road and the nature of your battle. The world you desired can be won, it exists, it is real, it is possible, it’s yours.”

10 Comments leave one →
  1. October 1, 2009 3:38

    I found your blog on google and read a few of your other posts. I just added you to my Google News Reader. Keep up the good work. Look forward to reading more from you in the future.

  2. October 7, 2009 3:38

    Thanks, Mike.

  3. October 8, 2009 3:38

    I enjoy reading your entries… I find them quite informative without being too matter heavy.

    So yes, consider me another reader and subscriber.

  4. Joshua Lipana permalink
    November 16, 2009 3:38

    Wonderful article Vince. This was very informative.

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