The proposed tax on texting

methinks the government is wearing the economist's hat on this issue. i understand that it is operating on the (proven?) assumption that demand for texting is inelastic. demand elasticity by the way is an economic measurement that determines whether changes in price/cost of a product would greatly affect the demand for the same product. demand inelasticity means the demand will not be significantly affected by increases in price brought about by something like the proposed tax. although i think there will be no nominal price increase, the relative reduction of the quantity of the goods bought at the same price will have the same net effect.

i faced the same problem in a quiz i had when i took up my introduction to economics class. the problem stated basically the same things we're seeing now: the government's need to raise funds, a product that happens to be a staple item for the filipino people, and the dilemma to take the course of imposing taxes. however, the product in our quiz was rice, and we were asked whether it would impose taxes on rice to raise funds. i answered that, from an economic view, demand for rice would be inelastic and thus imposing a tax on it would be best way to raise money. most of my classmates, however, took the political approach and argued that it would be bad and unhelpful for the poor, thus they would oppose imposing taxes on a staple commodity. they retook the test and i had a perfect score.

no, i don't support imposing a tax on texting. i, like millions of others, am a frequent texter, and i do find an unavoidable need for it. but i do understand how the administration is looking at it. so my perspective completely differs from that of the writer who probably, is starting from a premise that the administration is out trying to be tyrannical, and everything it does is aimed at doing every conceivable harm to the people. he is perhaps unmindful of the fact that we have an economist on the helm of government, and that she and her advisors are looking at the picture with the economist's glasses. i guess if he were in my intreco class, he would be retaking the quiz as well. my point is that these are economists trying to solve a problem they know too well, and not politicians trying to be win the approval of their constituents.