Olongapo Telecom & Information Technology

Sunday, September 20, 2009

What? A tax relief for telecoms?

Opinion Written by Butch del Castillo / Business Mirror = Omerta

We sometimes refer to Congress as a legislative “mill.” It is, after all, like a complex processing plant. It refines raw ideas (bills) into semifinished products called drafts of proposed laws.

But if it is a kind of “processing plant,” how come our Congress has often been criticized for being excruciatingly slow in acting on some of the most urgent bills, but remarkably efficient and fast in approving other pieces of legislation? Well, folks, the answer is obviously no other than “lubrication.” Lubrication is that efficacious substance that makes the wheels and gears of Congress turn with remarkable smoothness and speed. In our bicameral system, the legislative mill we call Congress is made up of two independent processing plants. Each one consists of a complex system of wheels and gears called committees and subcommittees. Each wheel or gear quickens in its efficiency only when well-oiled or—more aptly put, greased. Sometimes, the natural oil that our lawmakers produce out of a zeal to do right by their constituencies or pure love of country is sufficient. More often than not, however, the grease is provided by special interest lobby groups. It is this kind of lubrication that produces miraculous results.

In the House of Representatives only this week, for example, we saw a fine example of how this kind of greasing can perk up the enthusiasm of some of the members of the House ways and means committee to push a particular piece of legislation.

This committee—according to accounts made by members of the House press corps—reported out a number of proposed measures for plenary debates. It was discovered, however, that among the measures that were reported out was one that was never discussed in committee deliberations, at least in the recollection of party-list Rep. Jonathan de la Cruz.

Had Representative de la Cruz not raised a howl against it, the “smuggled” bill would have been calendared for plenary debates (plenary debates are a prelude to approval or disapproval by the House of any proposed law).

How this bill was “smuggled” out of the committee level (“railroaded” was the term used by our good congressmen) is a mystery my friend Jonath was still trying to solve as of this writing yesterday. In remarks made on and off the floor, according to the House reporters, de la Cruz lamented that on the one hand, his colleagues in the committee were strongly supportive of a bill imposing higher “sin” taxes (on tobacco and liquor) to increase the government’s tax take and thus pare down its huge budgetary deficit. But the same committee members also seem to back the idea of depriving the government of a fairer share of the huge net profits being raked in by these telecoms firms.

In other words, these overzealous congressmen don’t mind driving the tobacco producers of northern Luzon (his fellow Ilocanos) out of business by imposing bigger sin taxes. And yet they also want to grant these affluent telecoms firms a tax relief by legislative fiat. If passed, the bill would allow these companies to pay much less than the paltry amount of taxes they are paying now.

The bill angrily questioned by de la Cruz proposes to exempt some P30 billion in profits made by the telecom firms from any income tax assessment. (Copies of the highly questionable bill yesterday somehow suddenly became scarce. But I’ll get one and take it up again in this column the next time around.)

Figures provided by the Department of Finance show that the five providers of wireless telephone service alone (cell-phone companies) had combined revenues of P175.586 billion last year. The government’s share (in income taxes) of that huge income was only P21.448 billion.

The popular sentiment has always been to tax them a little more to help the government out of its fiscal predicament. But these companies have consistently resisted such an idea by simply threatening to pass on any additional tax burden to cell-phone users. This threat has been very effective in keeping Congress at bay on this ticklish question.

All the cell-phone companies have never had it so good, with their sales rising phenomenally for the past five years. They are, in fact, riding the crest of a sales boom that is not expected to flatten out in the next five. Why would they want to deprive the government of its fair share of their rich pickings?

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