Digital tax during pandemic to discourage online shift: Marcos

Katrina Domingo, ABS-CBN News

Posted at Jun 01 2020 12:40 PM


Digital tax during pandemic to discourage online shift: Marcos 1
FILE PHOTO: Doctors man online consultation booths in the Philippines, where a lockdown was imposed to curb the spread of the coronavirus, April 13, 2020. Jonathan Cellona, ABS-CBN News

MANILA - Taxing digital services will discourage people from going online at a time when small businesses reeling from the COVID-19 pandemic seek refuge in e-commerce, the head of the Senate economic affairs committee said Monday.

Sen. Imee Marcos was referring to a bill filed in the House of Representatives that sought to impose duties on streaming services like Netflix and Spotify.

"Nevermind the Amazons and Lazadas, for now. A myriad digital start-ups by entrepreneurial youth can grow a conflating economy and are waiting for government support, like online sari-sari stores, grocery deliveries and the home-based manufacturing of face masks and health essentials in our Ilocano 'BUYanihan' program," Marcos said in a statement.

"New taxes at this time can discourage broader public use of digital tools and services," she said, noting the Filipinos should "be allowed to get familiar" with how the world is getting things done under the new normal brought by the coronavirus crisis.

Marcos said it would be "a bit hasty to slap on new taxes" during a global pandemic. 

"Businesses will simply pass on the added tax costs to the consumers, most of whom are poor or middle-class," she said.

Contact-tracing apps, telemedicine, online learning, and e-commerce are becoming the norm because of global pandemic restrictions, the senator said.

"The growing 'gig economy' of work-from-home arrangements, freelance work, and self-employment, is also the emerging template of how a conflating, post-COVID economy will run," she said.

Google and Facebook earn P50 billion from ads in the Philippines, while Netflix earns P5 billion from Filipinos. They are not subject to value added taxes unlike cable television, said House Ways and Means Committee Chair Joey Salceda, author of the digital tax measure.

Finance Secretary Carlos Dominguez earlier said the Bureau of Internal Revenue was "working very hard" to find out how to run after those who "are supposed to be taxed but are escaping taxation because they are on the internet."