MANILA - Imposing a P0.05 tax on text messages without allowing mobile phone operators to pass this on to consumers is unconstitutional, Smart Communications Inc. said on Monday.

Smart legal counsel Roy Ibay pointed out that the provision in Ilocos Sur Rep. Eric Singson's House Bill 6625, which prevents telecommunication firms from passing on the indirect tax, is against the law.

"The provision of 'no pass on' will be a problematic issue," said Smart legal counsel Roy Ibay, noting that this violates certain precepts.

Singson's bill seeks to impose a P0.05 tax "for every overseas dispatch, message, or conversation transmitted from the Philippines by telephone, telegraph, telewriter exchange, wireless and other communication equipment services which shall be paid by the service provider."

Ibay said the bill clearly seeks to discriminate against a uniform or broad application of excise tax on services since mobile SMS (short message service) is being singled out to fund education.

"The bill also fails to explain the germane connection between funding education and SMS service. It is a clear example of detrimental class legislation which violates also the equal protection clause of our constitution," he added.

Taxation, he added, should be progressive.

"A progressive system of taxation means that tax laws shall place emphasis on direct taxes rather than on indirect taxes, with ability to pay as the principal criterion. A regressive system of taxation exists when there are more indirect taxes imposed than direct taxes," he explained.

Ibay said SMS is now considered a basic necessity for 70 million Filipinos and imposing a tax on it may "lead to overall economic decline."

Earlier, Singson said his proposed P0.05 text tax could raise about P36 billion for the government, whose finances have been badly hit by the global economic slump.

He added the amount that would help the government in its efforts to provide "people's basic needs."

"The contagion has put a strain on our resources, resulting in questions about our capacity to manage our limited coffers and at the same time provide better services for our growing populace," he said.