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The Almighty Buck

Taxing Text Messages? 173

Posted by michael from the bright-ideas dept.
Makarand writes "SMS is a very popular way of communication in the Phillipines with an estimated 14 million phone subscribers sending an average of 10 text messages a day. However, that may all change if a proposal from the IMF to impose a tax on SMS is implemented to solve the country's fiscal problems according to an article in The Straits Times. The IMF is basing its suggestion on the fact that the country's tax base currently rests on the troubled sectors of the economy- banking and manufacturing, which cannot be squeezed anymore. Hopefully, our political think tanks will not get any such ideas."
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Taxing Text Messages? More

Taxing Text Messages?

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  • They will tax you for anything, up to and including dying.
    • In China, when they execute a prisoner, they charge the prisoner's family the
      cost of the bullet. So, in a way, there is a country that will tax death.

      Wonder if they ever thought of taxing the cost of the bullet?

      SealBeater
      • The price of a bullet, damn that's cheap! Here in the good ole US of A they take half of everything you own.
        • Hey, don't worry. The Republicans are have repealed the estate tax, and it will slowly decrease to zero over a period of ten years. Then, wealthy families will finally be able to be permanent, and the USA will finally have a bonafide class of heriditary nobility.
          • well I was going to enter into a rational argument with you about fairness, freedom and the ineffecuality of government programs, but after looking at your website I'm not going to bother, you're obviously a complete whacko.

            which do you think hurts the poor more, repealing the estate tax or the current social security program?

      • In United Arab Emirates, if you are on work permit visa (and 75% of people are on it) and dye, your dead body must be sent to your original country on expense of your visa sponsor. Who often (depends on contract conditions) will charge your family.
    • is now flamebait? Not even a controversial fact at that.

      It's standard practice damn near anywhere the dead actually have any money, although the *means* of levying the tax are often disguised ( such as a sales tax of a procedure or piece of 'funerary equipment' with no overt need to exist but required by law).

      And what the hell else is an "inheretence tax" but taxing the dead? It comes from the deceased's estate, not from the heir's.

      KFG

  • SMS pricing (Score:5, Informative)

    by 00_NOP ( 559413 ) on Saturday December 21, 2002 @07:21AM (#4935614) Homepage
    In Europe, the telcos use SMS as a cash cow - it's unregulated (regulatory regimes were built in the age of analogue comms) and they rip you off. And it's already taxed (VAT) - it's time the companies charge a more realistic price (15 cents a text message is a typical price today).

    • Re:SMS pricing (Score:2, Interesting)

      by BalkanBoy ( 201243 )
      Or better yet, package it az VZW does in the United States - 3.99 for 200 incoming/outgoing messages. When was the last time you sent out 200 messages a month that you _really_ needed to send out and not bullshit with your spouse/friends over SMS?

      Besides, in some countries, receiving SMS is free, and the only one who gets charged is the sender.

      • Re:SMS pricing (Score:1, Insightful)

        by Anonymous Coward
        Besides, in some countries, receiving SMS is free, and the only one who gets charged is the sender.

        Make that "in every country except that one that seems to do wireless-everything ass backwards".

    • In Europe, the telcos use SMS as a cash cow - it's unregulated (regulatory regimes were built in the age of analogue comms) and they rip you off. And it's already taxed (VAT) - it's time the companies charge a more realistic price (15 cents a text message is a typical price today).

      Yes, its crazy. You already have user pays in almost every country where the phone system is taxed. In fact, I can't think of a single country where SMS is tax free.

      Sometimes there is a case for additional taxes (eg., alcohol, cigarettes) on social grounds, but I don't see that here.

      Its more like another way to make more money. The problem here is that this sort of double taxation is very inefficient. Similar to toll booths. You already pay taxes on your petrol, so paying again at a toll isn't sensible - you should just really pay more in petrol excise if you want better roads (after all, you dont get more user pays than petrol for car use). Likewise, it would make more sense to tax the total phone bill than just one component such as sms.

      My 2c worth,

      Michael

  • What's the problem? (Score:4, Interesting)

    by neksys ( 87486 ) <grphillips AT gmail DOT com> on Saturday December 21, 2002 @07:26AM (#4935624)
    14 million subscribers sending 10 messages a day is 140 million messages. If the tax worked out to 1/10th of a cent on each message, the total cost to the user would be 1 penny each day - certainly not an unmanagable amount. That works out to $140,000 a day - or $51.1 million a year. That's a sizeable amount of cash. This is one of those cases where the effect to the consumer is nearly nil, but the economic benefits to the country are quite large. We should be congratulating the Phillipines for finding a new and unique way to find money in an economically unstable region, rather than criticize. It certainly beats putting huge amounts of tax on addictive or necessary products such as cigarettes and gasoline like we do here in North America, which I've always thought of as really sneaky and low.
    • And if 1/10th of a cent is no problem for consumers, what's the government to say "hey, why not make this 1/2 a cent...surely they'll be willing to pay 5 cents of taxes per day."

      As soon as you let something be taxed, there will be no end to it. Governments are greedy like that.
      • Then you propose that they tax nothing? Governments are greedy, yes - but they do need money to function. You can make the system as efficient and corruption-free as you like, but the system still needs to be funded.
      • >
        Governments are greedy like that.

        People are greedy like that. Government simply enable peoples' illusion of having something for nothing, or, on more charitable words, government is peoples' Robin Hood.

        What happens is that countries become bigger than necessary, and so do their governments. Even the cantons of Switzerland were effectively transformed in provinces when the old Confederation Helvetica was turned into a federation. Not only that, but now we have continental governments (EU, NAFTA, etc) and world government (UN).

    • Re:What's the problem? (Score:2, Insightful)

      by geirhe ( 587392 )
      It certainly beats putting huge amounts of tax on addictive or necessary products such as cigarettes and gasoline like we do here in North America


      If my calculations are not totally off, we were at $5.5/gallon for unleaded petrol two years back in Norway. Guess what most of that money goes?

      We pay about $4 a gallon nowadays, and think that is dirt cheap. Most of that is still taxes.

      Petrol is not heavily taxed in the US, unless something fundamental has happened the last couple of years.
      • Petrol is not heavily taxed in the US, unless something fundamental has happened the last couple of years.

        . . . and will continue not to be, because Americans above all others seem to consider it a "right" to drive anytime, anywhere. Plus, many people's traditional distrust of big government makes instituting new public transportation systems rather difficult.

        There are reasons why this is so, however. I live in CT now, and it would be nearly impossible for me to run my life effectively without a car. I can walk to work, and reach most places in the city by walking or biking, but I can't buy groceries without the car. If I want to go to NYC, I always take the train, but if I want to go pretty much anywhere in CT I have to drive. I think this reflects the layout and evolution of Connecticut's cities more than anything else; if I lived in New York (which may yet happen) I wouldn't even bother to own a car.

        I used to live in Seattle, which has a similar problem- very spread out metropolitan area. Good bus system, okay for the occasional trip downtown, but annoying if you have to do it every day or travel a long ways. They've been trying to get mass transit working for years, and it's been an absolute embarassment and a huge waste of money (to the disgust of well-meaning folks like my parents, who voted for it).

        I've heard speculation that the car thing may reflect Americans' tendency to rush around. In NYC, the subway is usually faster; otherwise, people want to be at work ASAP, without any hassle or inconvenience. If you're a minute late to the bus stop in Seattle you've lost 30 minutes of your day, and it'll often take you twice as long to get to work anyway. In contrast, one of my co-workers came from London, and said he could spend 45 minutes walking to work or 2 hours driving.
        • Not exactly. Imagine that the price of gas goes up to 4$ a gallon. The US economy would screech to a halt.

          The price of goods and services already get bumped up quite a bit when gas goes up a quarter. It would be much worse if the US adopted a European system.

          Taxes on Gas in Europe also serve other purposes. When I lived in the UK for a few years, I found out that only 5% of the taxes on gas actually go to upkeep of the roads.

        • Agh, the whole "public transportation is a panacea" argument has been thoroughly debunked, in my mind. I've been in Tokyo for a while now, and the subways here simply take forever to get anywhere. Plus, they're expensive and don't run after 11:30pm or so. The stations are huge and have a large number of stairs. Getting in and out of the stations, and connecting to trains is a big problem for the elderly. My heart breaks when I whiz by some old lady in the subways, and she's taking the stairs one at a time...and those are the 'down' stairs! She has four flights of 'up' waiting for her at her destination!

          Let's budget time for a typical trip: eight minutes walk to the station, one minute purchasing a ticket, five minutes waiting for the train, fifteen minutes travel to your transfer station, eight minutes walking to your new train, another ten-fifteen minutes on the train, and another eight minutes walk to your destination. 45 minutes to get anywhere! Plus the $4-$8 round-trip fare. Not too great.

          Bicycling is cheaper, but it's only a good idea on:

          • straight, level ground
          • when it's not raining
          • when it's not freezing cold
          • when it's not burning hot
          • when the rider is between the ages of 12 and 50
          • when the rider is in good health, not recently injured or sick (try bicycling somewhere with the flu...not fun)
          The biker must be resigned to the fact that he will at some point collide with a pedestrian or vehicle. In a month of bicycle riding I've seen many such bumps, one serious.
      • A tax rate of around 30% is a high/heavy tax rate. It is not taxed as much as some countries, but it is still taxed highly.

    • Re:What's the problem? (Score:5, Informative)

      by perrin ( 891 ) on Saturday December 21, 2002 @08:03AM (#4935736)
      First off, it isn't the Phillipines that is coming up with this "new and unique way to find money", it is, as usual, the IMF. And if you actually read the article, you'd see that they expect a lot more than $51 million a year in tax income from this.

      Who will suffer? The poor, of course. The IMF always asks governments to crack down on the poor, while sheltering the rich.

      Unlike in Europe, where SMS is a cash cow for greedy telcoms, SMS in the Phillipines is free (or at least was until recently, I am not following very closely).
      • I can certainly verify that this will affect the poorer demographic. A cell phone is the first purchase a Filipino will make when attempting to raise himself above middle class. Networking is very big here and unemployment is so high your only real chance of obtaining a job in the city is through a referral.

        Everything is paid with "prepay" phone cards so even the poorest can take advantage of them. Texting is not completely free here (around 4 - 12 cents depending on what network you are dialing), but in a country where college graduates make around $300/mo people tend to be resourceful.
    • We should be congratulating the Phillipines for finding a new and unique way to find money in an economically unstable region
      even better: we should congratulate the phillipine government for spending beyond their means and bankrupting their people.
    • or $51.1 million a year. That's a sizeable amount of cash

      You and I would love to have $51.1 million dollars. However, I'll quote the following from NY Newsday [newsday.com]:

      ----

      With the decision announced yesterday, up to six anti-missile interceptors will be installed at Fort Greely and four more at Vandenberg Air Force Base in California by the end of 2004. As many as 10 more interceptors will be added to the Alaska site by the end of 2005. They are designed for use against long-range missiles. In addition, between 10 and 20 sea-based interceptors for use against short- and medium-range missiles will be deployed on three U.S. Navy Aegis vessels by 2005.

      Kadish said that the deployment would cost $17.5 billion over the next two years, but that $16 billion had already been budgeted to fund the testing program. Critics say the cost of the program could eventually soar into the hundreds of billions.

      ----

      OK, now we're talking about $17.5 billion dollars for 30-40 (35) missiles to be deployed. DEPLOYED, not R&D. We're talking $25 million per missile here. So they could deploy one missile per year, every year, for 18 years in order to stop 2/3's of the missiles that some country might launch against them. Yay!
    • FYI, the average SMS message in the Philippines costs 1 peso. (~2 cents). I wouldn't say the average Filipino texts 10 messages a day...probably around 15 or so...
    • neksys writes:

      If the tax worked out to 1/10th of a cent on each message, the total cost to the user would be 1 penny each day - certainly not an unmanagable amount. That works out to $140,000 a day - or $51.1 million a year.
      The problem is that they expect to raise almost a billion US dollars with this tax. That's closer to 2 cents per message. Now, as later posters pointed out, SMS in the UK costs on the order of 15 cents, but incomes in the UK are much higher than those in the Phillipines. (UK per capita GDP (ppp scaled): $24,700, Phillipines per capita GDP (ppp scaled): $4,000. Note that this is purchasing power parity scaled, so actual incomes in the Philipines are much lower than this indicates. Stupid CIA world factbook. 1995 numbers for the Phillipines indicate $850 raw per capita GDP, and I expect the PPP skew for the UK isn't too great.) This indicates that the equivilant cost of this tax to a Phillipino is 80 cents per message. And that, my first-world friend, is the message.
    • Well, the problem is general problem that plagues all governments. If you or I decide we need more money, say, for a new car, we have two choices: earn more, or spend less. Ask for a raise, get a new job, open your own business, whatever. Or, maybe, put off vacation this year or don't upgrade your computer so you can better afford the car. Government, on the other hand, can just seize whatever it needs in the form of new taxes, because government has the one asset none of the rest of us have: the free will to use force to accomplish its goals.

      I can't say, "Hey, I need more money!" and go out sticking a gun to the heads of people who use text messaging system to colllect 1/10th of a cent for each message they send. I'd get thrown in jail pretty quick. Government, on the other hand, can. Deny the government its taxes, and just wait how long it takes for the guns to come out. I can't really figure out how one of these examples is stealing, but the other is not.

  • In the US you are taxed for phone text messages (Score:2, Insightful)

    by Anonymous Coward
    The $0.10-$0.05 per message is taxed.

    If you want to look at it, the $0.05 per message is a 'tax' for sending a message. What's neat about it is you are charged, and there is no guarentee of delivery.
    • What's neat about it is you are charged, and there is no guarentee of delivery.
      Kind of like sending a letter in the post.
    • there is never guarentee of delivery.... thats how sms works...

      here in sweden they did some kind of tests where they sent out something like 10 000 sms messages from different places with each of 3 operators that have gsm networks here. the worst operator (comviq) delivered something like 98% of all sms while the other 2 (telia & vodafone) delived almost 100% of all sms messages.
      most sms messages where delivered in something like 15seconds but sometimes it could take up to 2-3 minutes.

  • High prices on SMS's here (Score:3, Informative)

    by John Zero ( 3370 ) on Saturday December 21, 2002 @07:30AM (#4935633)
    Here, in Hungary (Europe), one SMS costs 12-15 cents (price converted to USD). This sum contains the base price + 25% tax (VAT).

    The phone companies ARE using SMS's as cash-cows, since there's no way the infrastructure would justify this cost.
  • he IMF is basing its suggestion on the fact that the country's tax base currently rests on the troubled sectors of the economy- banking and manufacturing, which cannot be squeezed anymore.

    Hint: if you stop squeezing they will expand. If you squeeze IMs thye will contract. Witness the revenue bonanza that US government gained by dropping the capital gaines tax just a little bit, not even down to optimum.

    "Keynesians rush in where Stalinists fear to tread." -- me
  • The thing to remember is that the reason SMS is so popular is because it's a fast, cheap and easy way of keeping in touch with loved ones. While people need love, people are going to use this type of communication; it is reprehensible that there should be a tax on this sort of thing.

    This just shows that governments around the globe are all really after one thing - money. Usually it is at the cost of freedoms, but now it is at the cost of emotions. How low can we get?

  • what about.. (Score:4, Interesting)

    by nick-less ( 307628 ) on Saturday December 21, 2002 @07:34AM (#4935648)
    ... charging a tax of 2 cent for every spam mail sent

    • Re:what about.. (Score:2, Interesting)

      by ottffssent ( 18387 )
      Two cents, one for the government, one for the recipient. I get about 7,500-10,000 spams a year; at 1 cent per, that would buy me a new CPU every year. Which I could definately appreciate, as this $50-three-years-ago-Duron is starting to feel a bit threadbare.

  • It's the IMF! (Score:3, Insightful)

    by Mel ( 21137 ) on Saturday December 21, 2002 @07:38AM (#4935665) Homepage
    Bear in mind that the IMF are only brought in when the country is seriously screwed with it's economy already. When they are "advising" the government, they will take whatever steps are necesssary to get the country back on track rather than falling further into financial ruin. They often will take sometimes drastic measures and it is expected it is going to be a tough 5 to 10 years for the countries population. At least in this case, taxing SMS messages, which already happens in a number of countries (I'm taxed 2.5c (Euro cent) per text message which is tax at 21%) . This issue is not one to get into a twist over.

    • Re:It's the IMF! (Score:2, Informative)

      by msgmonkey ( 599753 )
      Actually the number one priority for the IMF is to make sure debts are paid. What normally happens is that there is a recession or some kind of financial crises regarding monetry policy (and in many cases caused by previous IMF policies such as currency pegs) or both.

      The problem for these countries is that the IMF most of the time just goes in and raises taxes. Now if you are in a recession raising taxes is not going to encourage growth in fact the opposite, so you get into this downward spiral where you get less in tax revenue as a recession deepens therefore needing you to increase taxes even more.. eventually it all f'ks up and you end up calling in... yeap the IMF, whos cure is to increase the debt burden into order to pay debts.

      You see the IMF will not lend you money in order to grow the economy, they lend in order to roll over debt. It is the World Bank that lends in order for growth.

      The IMF gets called in since if the country does n't the interest rates they pay for money borrowed on the international markets rocket. It's kind of like a guarentee for lenders. If you don't play by the rules you end up like Argentina, which ironically until recently was an IMF "Success story".

      The whole world economic system is based on debt and default means financial ruin. The IMF is there to make sure debts get paid regardless of the social costs. The problem is for every IMF success there are 10 other failures.

      Of course it's not this simple, there are other factors such as politcal stability, corruption, external factors such as currency speculation, etc etc.. but the IMF "debt police" are always at hand to swoop in.

  • HUH? (Score:4, Insightful)

    by jonr ( 1130 ) on Saturday December 21, 2002 @07:44AM (#4935681) Homepage Journal
    Aren't SMS already taxed? You pay for each SMS message, it shows up on your phonebill, and then the government adds salestax or value added tax. End of story.
    I assume that phone companies pay taxes there, like every other businesses....
    J.
    • yup and there's the the income tax the poor folks paid before they even got the chance to pay the sales tax.
    • Perhaps they should do something oh so "radical" like Russia did and just make a 15% flat tax. [satire engaged] The horrible, awful, terrible result is greater reveues than at any time ever in their history AND the greatest economic expansion ever too.

      Horrible, oh the humanity! Equal taxes for all. [satire disengaged]
    • Yes they are - so what? This is not a new concept. In Germany we pay mineral oil tax on gas (+VAT), there are taxes on cigarettes (+VAT), liquor (+VAT) and so on... I'm sure this applies to other countries as well.
  • in italy someone (of the politicians) was hoping to get an email tax some years ago. i never saw more details of it, whether it should have been for who spent mail or who received it. and they didnt even think how to apply it for some who dont use italian email providers. fortunately THAT stupid tax never came true!!!

  • Tax on the stupid? (Score:5, Insightful)

    by dpt ( 165990 ) on Saturday December 21, 2002 @07:53AM (#4935708) Journal
    So, given the demographic that seems to like "texting", isn't this like lotteries ie. a tax on stupid people? It seems to me to be only interesting to people for which email is some sort of "novelty".

    Text messages are *ridiculously* expensive already, for what you get. Think about the cost per byte that they are charging people! I'd be prepared to pay a very small flat monthly fee to send as many messages as I like. Any thing else is simply price gouging.

    Not to mention that they take too long to compose. It amuses me to watch Joe Average compose one of these things. In the time it took to compose the message and send it, they could have called the recepient 10 times already, and sorted out whatever it was in 30 seconds, or left a message at the speed at which they can speak.

    Still, no one ever underestimated the intelligence and taste of the general public ... and with the baffling popularity of "texting", this trend looks set to continue into a new century.

    • It seems to me to be only interesting to people for which email is some sort of "novelty"

      And there was me thinking I was a proper geek. I guess I'll go back to finding email a novelty then...

      BTW If you ever saw the speed with which some youth in the Philippines can text with you wouldn't be too amused :D
    • It may be stupid for you to text. given the price, but don't assume we're all stupid because some of us get a good deal.

      I'm with O2' web tariff here in the UK, which gives me 50minutes talk time a month to *any* UK landline or mobile, with 600 free texts a month. Bear in mind that unlike in the US caller pays, there are no charging for receiving texts or calls.

      This costs me 10UKP a month, about 15USD. Texts are great - I can furtively gossip with my friends and lady while sat at work in front of a suit with a powerpoint presentation, try that with talking. Also it's a non-intrusive technology, unlike a phone ringing which may annoy the recepient at 3am but a text is received and can be read whenever. Plus I could write a book about just why people flirt over sms...

      And the composing thing - believe me when in front of that powerpoint presentation I can text with one hand and the t9 predictive text means as long as you choose your words correctly it's as fast as one-handed on a keyboard. Or I can use my palmpilot keyboard to text via IR which appears to onlookers as if im taking notes from the suit...

      Don't knock it if you don't know it. And further, it would be easier for governments to increase VAT on text messages instead which would have been even worse as businesses can generally reclaim VAT.

      seany

    • Re:Tax on the stupid? (Score:5, Informative)

      by murphj ( 321112 ) on Saturday December 21, 2002 @08:19AM (#4935763) Homepage
      So, given the demographic that seems to like "texting", isn't this like lotteries ie. a tax on stupid people? It seems to me to be only interesting to people for which email is some sort of "novelty".


      That may be true elesewhere, but not in the Phillippines. According to this [business2.com] article, text messages in the Phillipines are pervasive and cheap. They get pay per use cell phones for about $5.00 and can strech that to two months with 4 text messages/day (vs. .5 hours talk time).
    • I spent about a month in the Philippines this last year, and text messaging is huge. Everybody has a cell phone, even if they don't have a house. People use them to keep in touch accross the large country. Pilipinos rarely make an actual call, they text short messages back and forth all day. They have "text mates" kind of like pen pals.. people that have never met but correspond over text. I bought my wife a few pre-paid cell cards.. they ran about 250 pesos.. USD5.00. This gives you very few minutes of phone time.. but unlimited text messaging. If this was to be taxed, it would be very detrimentel on the pilipino society. My wife and I are in Japan, the only way we can keep in touch with her family is over SMS texting.
    • SMS messages are written to a device (your cellular phone) both you and the receiver is likely to bring with you all the time. This means it's better suited to small messages you'd like the recipient to get very soon than email.

    • Re:Tax on the stupid? (Score:2, Informative)

      by amorangi ( 187312 )
      The parent has no idea what he's talking about.

      As an ex-pat living in the Philippines... Text messaging is rediculously cheap here (US$5 does me 3 months easy), and pretty much everyone uses pre-paid scratch cards to pay for their phone use. However landline phones are rediculously expensive, at about US$20/month - a lot in a poor country. That's why most people use SMS to communicate - it's all they can afford.
      It's typical of the IMF to suggest squeezing the poor for more revenue - while the politicians sit back and take untaxed bribes. Heck, you can even bribe officials at the tax department to accept your dodgy tax return. Maybe if they eliminated some of the corruption the tax take would be higher.

  • think tanks (Score:2, Funny)

    by Anonymous Coward
    Hopefully, our political think tanks will not get any such ideas.

    We have think tanks over here? I thought we just had televisions.

  • The IMF is a Scam (Score:5, Interesting)

    by hanwen ( 8589 ) on Saturday December 21, 2002 @08:10AM (#4935744) Homepage Journal
    I recently read an article on the IMF.

    The IMF is a vehicle for implementing a policy that is designed to make poor nations poorer, and the US based financial world richer.

    The IMF has a standard approach of privatization, deregularization, more taxes and less government spending. In practice, state assets are sold off to foreign investors, and capitals markets are deregulated to open the gates for speculation. At some point the price of basic living (cooking, heating, taxes) is raised, causing massive civil unrest, and collapse of the economy. In the ensuing turmoil, foreign corporations can buy the remaining assets of a country at garage-sale prices.

    Don't take my word for it. Read about Joseph Stiglitz [columbia.edu] (Nobel laureate, former IMF economist and former director of the worldbank)

    Or name a country where IMF intervention did work: (it failed in Indonesia, Thailand, Russia, Brazil and Argentina)
    • You're right. It IS a scam. However, the AMERICAN taxpayer is funding the damned thing and all it's used for is bailing out Citigroup, Bear Sterns, etc who make idiot loans to 5th world countries.

      The countries shouldn't be mad. They get free cash money. It's the american taxpayer that should be mad as hell, but nobody is. Why, you ask?

      Could it be because the media is owned by the big banks?
    • living in "developing" nations. I've seen this happen. I've come to the conclusion that it might well be better to starve on your own than take the "help" the IMF offers. Of course this is rarely an option because the IMF is usually called in by the 'developed' nations who already have the nation in trouble by the economic balls. The money raised isn't used so much to bail out the local economy as it is to bail out American and European companies invested in the troubled nation. Economic investments in 'infrastructure' are usually even made in such a way as to make sure all the jobs and money go to these Americans and Europeans, rather to local businesses and workers, thus actually depressing the local economy even further.

      I think most people in 'developed' nations might not realize one other fact that relates to this specific issue. In rich countries it's the more economically 'endowed' and early adopters who are the most likely to have cell phones. They're a nice little toy.Teenage girls use them to keep track of each other while shopping at the mall for clothes they can't fit into their already overstuffed closets.

      In poor countries it's the *poor* who are most likely to have cell phones. Your house may not have electricity. Hell, you may not even have a *house,* but you can at least scrape up enough money to have a phone so if a job offer comes in you can get it, and steal recharges from whatever source you can manage. Rich people have homes and land lines.

      The *banks and businesses* are too poor to pay up enough to stay solvent (or are just plain not paying up). The solution is to squeeze pennies from the poor and unemployed.

      Ummmmmmmmmmmmm, right.

      KFG
      • In poor countries it's the *poor* who are most likely to have cell phones.

        Seriously, this is one the biggest crap I've ever heard. I am from one of the 'poorer' country, and if you don't have a job, you apply and sit at home waiting with the much cheaper land line instead of the more expensive phone lines. Bear in mind the subtle fact that a family of 5 can share the same line while cell phones are only for one individual.

        'Poor' countries ain't that bad. We don't have 1% of population paying 70% income tax (huge disparity in earning), and our lawyer per capita is often much lower than doctor per capita. Health care quality is often a little lower, but it's AVAILABLE even if you are 'poor'.
    • So the IMF sells well to politicians that want to better themselves economicly AND the politicians that go bleeding heart every time they see a picture of a poor person? If the story is true, then they have quite the racket.
    • I happen to think that the IMF sometimes offers mistaken economic policy as well (I am not an economic expert, but from my reading about Russia and China I believe there are cases where government guidance is necessary to put the economy on stable ground, and then it can be deregulated). But just to make sure everyone is clear on what Stiglitz is saying, he is NOT saying that "The IMF is a vehicle for implementing a policy that is designed to make poor nations poorer, and the US based financial world richer." Or, at least, he is not saying that the IMF's policy goal is to make poor nations poorer for the sake of making the rich nations richer. That may be an unintended consequence, but it is not the IMF's goal according to Stiglitz. Here's what he wrote in his New Republic article:

      "It's not fair to say that IMF economists don't care about the citizens of developing nations. But the older men who staff the fund--and they are overwhelmingly older men--act as if they are shouldering Rudyard Kipling's white man's burden. IMF experts believe they are brighter, more educated, and less politically motivated than the economists in the countries they visit. In fact, the economic leaders from those countries are pretty good--in many cases brighter or better-educated than the IMF staff, which frequently consists of third-rank students from first-rate universities. "

      In other words, Stiglitz thinks the IMF is wrong - not purposely malicious.
      • The TNR article is one and a half years old. I think mr. Stiglitz has become more pointed in his critique. In an interview with the Dutch magazine intermediair (December, 12, 2002), he said

        I want people to understand that the IMF is not the independent technocratic organisation it purports to be. It is a political organ that defends the interests of the financial community in the United States. I tell my students how it works, there is nothing magical in there. The US simply appoints someone to execute an agenda. That's easily done, since the US is the only country with the right to veto decisions.

        The interview (in Dutch) is here [intermediair.nl]

    • Additionally, you ask where IMF intervention has worked. Well, it's very hard to measure whether IMF intervention was successful or not. After all, there are a lot of factors in an economy. If an economy booms after IMF intervention, it doesn't necessarily have anything to do with the IMF (Russia's economy is doing better today because oil prices have risen, not because of the IMF). On the other hand, if an economy collapses despite IMF intervention, it doesn't necessarily mean IMF intervention was bad - the economy might just have had too many problems for the IMF to correct.

      But, it is possible to argue that the IMF intervention was successful in South Korea. The South Korean economy contracted by 6.3% in 1998 (source [bankofireland.ie]) after the Asian economic crisis hit, but it has rebounded very well. According to one report, "GDP growth for 1999 was 10.7%, possibly the fastest recovery ever." (source [tradepartners.gov.uk] Its GDP growth for 2002 is 6.1%, and GDP growth for 2003 is estimated to be 5.3%. (source [yahoo.com])

      South Korea's recovery from the Asian Crisis has been very good. In fact, people are talking about how South Korea might become the new model for Asian economic development, taking over from the Japanese model. The South Korean model is basically moving away from export-driven growth to domestic consumption driven growth.

      This model, I will point out, is essentially the American model for economic growth. And, also the model the IMF was pushing.

      Thailand has also recovered fairly well from the Asian economic crisis. Its GDP dropped 1.7% and then 10.7% in the wake of the crisis, (source [adb.org]), but bounced back by 4.4%, 4.6% (source [dfat.gov.au]) and then 1.8% (source [economist.com]). Its recovery hasn't been as good as South Koreas, but its has been recovering. Its unemployment has remained very low. And frankly, given that people thought that the Asian crisis might lead to a worldwide depression, I think that's pretty incredible. Remember how long it took the world to get through the last depression - when there was no IMF.
    • Steve Forbes (probably the most visible supply-sider around these days) is always talking about the stupidity of the IMF, most recently: [forbes.com]

      The IMF, with its lethal prescriptions of devaluing currencies and raising taxes, continues to wreak havoc around the developing world. Turkey--critical because it is a pro-American, secular Muslim nation whose help we need in the war on terror--is writhing under the IMF's economic treatments. So is Brazil.

      The IMF Has Lost Its Way [forbes.com] by Stephen Hanke makes a solid case for killing the IMF.

      Why the IMF and World Bank survive is beyond me. I'm not hopeful that anything will change in the near term, given that Bush picked a Goldman Sachs alum to be his economic advisor, against the wishes of supply-siders [nationalreview.com], likely in part to smooth things over with the opposition Democrats (Goldman Sachs is an overwhelmingly Democrat company, Clinton Treasury Secretary Robert Rubin came from there, as did current New Jersey Senator Jon Corzine). Hopefully I'm wrong about this.

      Note that an American is never appointed to head the IMF. Usually a European gets the job, never mind that America puts up the largest share of funding. I don't know why we let them get away with this.
    • While it's a little harder to ignore the world, there are sucess stories like Japan. They told the west in general to stick it for a couple hundred years and studied like hell. When the US finaly showed up with gunboats, they opened up a little, studdied even harder and thought about how to tell the US to stick it. In all that time, they were very careful to not let anyone else exploit them. Finally, after a little not so nice expansion and a US economic boycot, they decided to tell the US to stick it. The US then crushed them utterly, decimating their military and flatening many large cities. Oh well, independence has a cost sometimes. Still, today they avoid economic exploitation. Their workers now earn more than US workers, on average, and they may actually work fewer hours. Ha!

      It's all a matter of how much respect you have for your fellow citizen. In order for outsiders to enslave you, you must first enslave yourself.

      In any case, this silly IMF phone tax will indeed tax business regardless of how regressive it may be. Reduced communications hurt everyone and slow up the entire economy. When you can't talk, you can't get things done.


  • The more tax revenue governments take in, the more they spend.
    I doubt that this would do anything more than raise the overall levels of expenditure in that country.
  • Come on.. where do you live? Every local government is like that.. looking for ways to squeeze every dollar they can out of their public.

    Ever hear of the initiative to tax email for example?

    What makes it worse is that the public workers never even see the money.. it goes to the legislature's pockets 90% of the time.

    Its sad. None seem to understand economics.. less spending power = less spending = less tax revenue... from a local state rep : ' Gee cigarette tax revenue is down since we raised the tax last summer, we don't understand. We will have to raise the tax higher to make up for the lost revenue.. ' This was of course just after they froze all regular government employee salaries for 2 years, and bought the governor a new jet...

  • Take IMF "Solutions" with a Pinch of Salt (Score:4, Informative)

    by MoThugz ( 560556 ) on Saturday December 21, 2002 @08:46AM (#4935810) Homepage
    The IMF financial solutions are not always ideal. Look at what happened to countries which actually implements its proposals. Most end up becoming worse before seeking IMF bailouts.

    Indonesia didn't improve, Argentina's financial woes worsens, and S. Korea ended up pawning some of their biggest companies. Malaysia almost took up IMF's offer during the 97-98 financial crisis, but luckily the govt forsees the impact of some of the conditions... and Malaysia is recovering quite well if compared to other countries in S.E. Asia.

    The Filipino govt should be able to decide what's best for the country's economic condition because they are more familiar with the economic factors involved.

    I'm not saying taxation is a bad decision, but it shouldn't be at the expense of the population's financial well-being. Perhaps taxation of mobile phone sales and accesories would be more fair?

    Just my $0.02's worth.
    • > Just my $0.02's worth.

      I think I just found what they'll be taxing next! (Warning: completely made up figures).

      /. stories per day: 30
      comments per story: 500
      worth per comment: $0.02

      Worth per day: 30 * 500 * $0.02 = $300
      per year: $90,000

      Tax at 15%: $13,500 per year

      Small beer I know, but it's a start.
  • well price of sms is probably going to drop down soon. now that mms is introduced in most countries (at least here in europe) its going to bring down the price of sms. also most new telephones support something called "sms over gprs" where you basicaly send your sms over gprs network. as gprs is very cheap here it would bring down price of single sms by more than 75%.

    today standard sms price in sweden: 1,50 skr (around 0.15$)
    if sent over gprs network: 0,20 skr (0.02 $)

    main problem here is that none of current operators here support that function (i dont blame them, it costs them something like 0,01 skr to send sms and they take 1,50skr for each sms)....



  • "Hopefully, our political think tanks will not get any such ideas."

    Yeah.. Its not like youre posting the idea on Slashdot or anything.

    Cheers,

  • I live in the Philippines (Score:3, Informative)

    by m0RpHeus ( 122706 ) on Saturday December 21, 2002 @09:06AM (#4935852)
    an SMS here costs PhP 1.00, or approx. 2 cents. Cheap compared to most countries.

    Most people here are not in favor on puting tax on SMS because believe it or not, most of the SMS users are in the middle-class and below. It's because it's hard to get a land line here, and the cheapest way to get around it is to use SMS. Paying high bills is not a problem because most are using pre-paid systems.

    I don't think it would push through because as of now, most of the law makers are againts it. And most are againts it not because we'll have to pay more, it's also because we're sick and tired of the dictations of the IMF.

  • They should just tax corporate profits and let the corporation decide how to pass it on to the workers/buyers.
  • Hey, let's tax Tea while we're at it. But seriously. EVERYBODY in SE Asia uses SMS. If you can go 5 minutes without hearing and SMS reciept tone, there must not me anybody else withing 50 feet of you.

    But that sort of taxation is the tactic of a government who can't support itself... Then again, the Phillipines needs some serious help. It is the definition of third world, sadly.

  • In The Philippines.... (Score:3, Informative)

    by acermate433s ( 635891 ) on Saturday December 21, 2002 @10:12AM (#4936042) Homepage

    is the surest (almost) way of communicating with someone. It is assured that the recepient will receive the SMS message and cannot ignore it. Unlike calling, wherein the recipient could just not answer the call. The quality of the service here is not that reliable for calling.

    Most of the cellphone users here are pre-paid. We just buy $5.00 worth of credits that can be stretched for 2 months before expiration. Compared to post-paid users, the cheapest plan is between $10.00 - $12.00 per month. This includes 66 free text messages (if you send to the same network, outerwise you would be deducted $0.02 cents on your credit) every cycle, which is repeated every month. Therefore if the pre-paid subscriber can stretched his credit for two months he/she would have 132 free SMS messages. In the long run, if you are just using SMS, you can save a lot.

    SMS messages here are not unlike IRCs (we Filipinos are just too fond of gossips =)). We abbreviate words, sentence, heck even entire phrases to send our message. T9 here just don't cut it. Even non-geek people here are at ease with using a cellphone, they may not know how to use email but they can sure type out messages in almost most cryptic, IRC style SMS messages.

    I for one does not approve of the meddling of the IMF in the internal affairs of my country. But I will approved the increase taxation of sin products.

  • SMS pricing (Score:1, Interesting)

    by Anonymous Coward
    Some random comments and trivia knowledge. And a small suggestion to open source communities..

    Philippines have been most active SMS users mostly because there the SMS is free (is in major cases and was in all cases) according to my knowledge.

    Elsewhere I wouldn't blame goverments on imposing quite normal VAT on SMS, when for operators e.g. in Europe price of SMS/bits transferred vs. price of phone call/bits transferred is still around 1000 (some time ago I remember some calculation in Mobile Pricing Conference in Barcelona where the SMS was calculated to be 950 more cheaper, when only airtime cost is calculated). So SMS is really a money cow.

    But things are even more sweet especially here in Finland when we talk about Value added SMS (premium SMS) where some poor application provider tries to catch some value for content and for this price premium operator takes nearly always more than half (e.g. normal SMS price is at cheapest 0,07 euro and VA SMS can cost for customer for example 0,5 euro where content provider gets around 0,2 euro and operator charges around 0,2 euro just for pricing!!), and that is something I call beeing cheap bastard. Especially when European operators are all the time wondering what happend to their long awaited revenues for value added services.

    Well tomorrow might be brighter, when new version of SMS, MMS and EMS are coming. And at the same time there comes new Symbian or some other OS based phones that allow application developers to tailor the phone qualities more. Operators MMS pricing follows pretty much the same pricing as SMS. But now the backend server side and phone side (client) are more open and basically it is possible to make an almost combatible MMS client-server application that is operator independent, runs over GPRS and kills not only operators greedy MMS value chain, but also their existing SMS value chain!
    - please somebody do it for me, when I am lazy and bit handicapped when it comes to programming.

  • "[...]they rip you off. And it's already taxed (VAT) - it's time the companies charge a more realistic price (15 cents a text message is a typical price today)."

    While 15 cents is inexcusably steep (10 a day = ~$45 a month!), I dont think that something like 2-5 cents a message is a bad idea, especially if the area needs money, the average person only sends 10 a day, and there are millions of users. It sounds like a very reasonable way for the citizens to help their region.
    • But how do you know whether they aren't already helping their region by working in sweatshops for little money and no benefits? How do you know whether the Banking and Manufacturing sector actually 'cannot be squeezed anymore' or whether there are powerful executives making thousands of times the per capita income, making the profits appear low so that those companies have to pay little or no taxes?

      As for the original posters hope that U.S. thinktanks won't get the same idea, I would ask the same questions about the U.S. system [essential.org].

  • I wouldn't have a problem (Score:4, Funny)

    by bahwi ( 43111 ) on Saturday December 21, 2002 @12:00PM (#4936430)
    I wouldn't have a problem with it here in the U.S. if it was, as someone said, 1/10th of a cent!

    Of course, looking back to reality, it would go to causes [jointogether.org]
    I [iol.co.za] differ [newsday.com] on. [boston.com]

    Sigh, when I was younger, you could do a search on "Bush" and come up with, um, things, other than politics.
  • Let them get ideas...ill just stop using the service. When everyone stops using it and it effectivley becomes dead, will they make it free again? And if not, we can probably live without it. Cheers!

  • The IMF Causes Problems, Not Solves Them (Score:3, Informative)

    by puppetman ( 131489 ) on Saturday December 21, 2002 @01:54PM (#4936871) Homepage
    International pirates.

    They come up with some grand scheme to help a 3rd world country, and loan them a bunch of money for a dam, a power plant, etc, etc. It fails miserably.

    Now the country has to pay this mega project off, plus their original debt. If the country looks like it will default on their payments, the IMF comes in [nadir.org] and says, "We'll prop you up, but we need to be in control." The IMF then gets farmers to change from food to cash crops, cuts off any semblence of workers benefits, etc.

    For example, in Equador, "...the IMF's 167 loan conditions look less like an assistance plan and more like a blueprint for a financial coup d'etat"

    As Bruce Cockburn sings, "IMF / dirty enough / takes away anything it can get / always certain that theres one thing left / keep them on the ropes with unsupportable debt..."

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