THE move to tax the rich came after non-government organization Oxfam International called for government to impose higher taxes on the country’s super-rich.
Oxfam and its Philippine affiliate noted that “inequality experienced in the Philippines is starker with the nine richest Filipinos having more wealth than the bottom half (55 million) of the population.”
In a report released at the opening of the recent World Economic Forum (WEF) in Davos, Switzerland, Oxfam said that the richest one percent of people on Earth made almost two-thirds of the new wealth created since the pandemic began.
The world’s richest have absorbed a greater proportion of global wealth during the pandemic and over the past decade, while global poverty has increased for the first time in 25 years, according to the report, titled “Survival of the Richest.”
Oxfam also called on world leaders to significantly increase taxes on the ultra-wealthy, targeting their income and capital gains.
‘… a “wealth tax” is discriminatory and would be a disincentive to people who work hard.’
“As a starting point, the world should aim to halve the wealth and number of billionaires between now and 2030, both by increasing taxes on the top 1% and adopting other billionaire-busting policies,” the report said. “This would bring billionaire wealth and numbers back to where they were just a decade ago in 2012.”
Recognizing the soundness of this idea – -which incidentally is not at all new — Albay 2nd District Rep. Joey Salceda, chairman of the House Committee on Ways and Means, has proposed the expansion of the non-essential goods tax, which would see luxury goods items taxed more and generate at least P12.4 billion in annual revenues.
Salceda’s proposal is to tax “non-essential goods whose prices are beyond the reach of the bulk of consumers, and which are not significant or important inputs to other value-adding industries.”
“I’m looking at a short list of additional items in this Louis Vuitton Tax. Basically, the aim is to find some way to tax the rich consistent with the constitutional principle of progressivity in taxation. For now, my shortlist will generate P12.4 billion at least,” he said.
His proposed expansion of the non-essential goods tax would include wristwatches, bags, and other leather items above P50,000, as well as luxury cars above P5 million in price, private jets and residential properties above P100 million per unit, and beverages above P20,000 per bottle.
The non-essentials goods tax will be on top of all other taxes, such as the automotive excise tax, value-added tax (VAT), and other taxes on the sale of residential properties.
PCCI president George T. Barcelon has issued a comment, in effect supporting the “imposition of higher tax rates on luxury items” such as branded bags and watches and the high-end smart phone models, but not a “wealth tax.”
Barcelon said a “wealth tax” is discriminatory and would be a disincentive to people who work hard. In addition, this would go against the drive of the government to attract foreign direct investments.
The bill that will incorporate all these ideas to tax the rich or the market segment that only they can afford should undergo a thorough discussion in Congress because the intended gains in government revenues may be negated by a spike in smuggling of these items and the cost of implementing such a law.