Senator warns against adverse impact of digital-economy tax

RAISING serious concerns over government’s scheme to “tax the digital economy” to raise more funds to contain the Covid-19 contagion, Senator María Imelda Josefa “Imee” R. Marcos warned the move is likely to backfire on vital public services, businesses and jobs.

“Taxing the country’s growing digital economy will hamper health services, education and the creation of businesses and jobs, even as it raises funds for the government’s fight versus Covid-19 [coronavirus disease 2019],” Marcos, chairman of the Senate Committee on economic Affairs, said on Monday.

Calling the move as “a doubleedged sword,” she noted that the proposed revenue-raising schemes include a 10-percent tax on all imported goods conceived by the Department of Trade and Industry, and a separate tax bill on digital services filed in the house of Representatives.

Marcos found it to be “a bit hasty to slap on new taxes in the midst of an economic crisis when people are looking for subsidies, discounts and longer installment plans due to reduced incomes or jobs lost.”

Anticipating that businesses will simply pass on the added tax costs to consumers, she foresees this additional imposition will hit hard ordinary folks “most of whom are poor or middle-class.”

At the same time, the Senator pointed out that contact-tracing apps, telemedicine, online learning and e-commerce are becoming the norm worldwide, adding this will increase public demand for imported digital products as necessities rather than luxuries.

“Never mind the Amazons and Lazadas, for now,” Marcos advised noting that “a myriad digital startups 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.”

She foresees that 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.

“New taxes at this time can discourage broader public use of digital tools and services. We must first be allowed to get familiar and participate in the world’s new ways of getting things done to stimulate business and job creation,” the Senator said.

“The best use of government’s limited resources from current taxes and external loans should cover MSMES [micro, small and medium enterprises], whether brick-andmortar or digital,” she added.