AMID calls to tax the rich, the chairman of the House Committee on Ways and Means on Monday said the panel is studying the imposition of non-essentials goods taxes on several lines of luxury items.
Albay Rep. Joey Sarte Salceda issued his statement in response to calls from international organizations like Oxfam International that the Philippine government impose taxes on the country’s super-rich.
The calls were also made as President Ferdinand R. Marcos Jr. heads off to the World Economic Forum where he will address the world’s richest individuals and countries.
“I can’t target one specific section of the population for what they supposedly own. They will simply apply for foreign citizenship and move their money to other countries that will be happy to take them,” Salceda said. “But wealth induces luxurious lifestyles―what economists call conspicuous consumption. We can slap taxes on those items, since they won’t mind paying them anyway.”
Salceda is referring to Section 150 of the Tax Code, as amended, which currently imposes a 20-percent tax on the price of jewelry, perfumes and yachts.
The lawmaker added that the committee will definitely pass a measure expanding that list.
“But we will discuss which items can generate the most revenue for the least effort.”
Salceda said his committee is particularly studying taxing the following: wristwatches, bags and other leather items above P50,000; private jets; luxury cars above P5 million; the sale of residential properties above P100 million; beverages above P20,000 per bottle; and, traded paintings above P100,000, among other items.
“Generally, the point of the debate will be what can be universally considered ‘luxury,’” the lawmaker said. “To me, it is when an item is beyond reasonable reach of the vast majority of the population and is not necessary for any essential function.”
Salceda added that the correct valuation of real property in the country is “also an essential step in ensuring that we tax the rich properly.”
“Instead of taxing highly mobile or movable capital such as cash, stocks, bonds and other financial instruments, we can tax luxury real assets better,” Salceda added. “And we won’t have to create new taxes, because we are supposed to value those properties correctly anyway.”
Obscene inequality levels
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.”
Salceda agreed that “the levels of inequality in the country are obscene.”
“That’s not just in income or wealth. That is also present in concentration of economic power. We have the highest concentration of business in the hands of a few among all Asean countries,” he said. “And it leads to having a cartel pretty much in every essential industry.”
However, Salceda said that “taxing much needed capital will lead to more problems than solutions.”
“I want the rich to keep their money in the Philippines and spend it on our development,” the lawmaker said. “Driving them away by taxing highly mobile assets solves nothing for the country.”
Definitely an option
MEANWHILE, Salceda said taxes on the rich could lead to lower taxes on working class.
He said that the reforms he has pushed for tended to “take from the rich a fairer share and lower tax rates for everybody else.”
Salceda cited the Train law (Republic Act 10963) and Create law (RA 11534) as examples.
He explained that the Train law increased income taxes on the super-rich, but lowered taxes for the rest of the public—some 99 percent of payers of personal income tax.
Meanwhile, the Create law, Salceda said, clawed back some of the tax incentives from overgrown or over-pampered industries but lowered corporate income taxes for everybody else, especially small businesses.
“If we can raise more consumption taxes on luxury items, we might be able to begin lowering the VAT [value-added tax] for most other things,” the lawmaker said. “That’s definitely an option—if we can raise enough revenues from the purchases of the rich.”
Earlier, Makabayan bloc has re-filed House Bill (HB) 258, which seeks to impose “super-rich tax” on individuals with net value assets exceeding P1 billion.
The bill proposed a tax on the super-rich: a tax of 1 percent on wealth above P1 billion; 2 percent on wealth above P2 billion; and, 3 percent over P3 billion.
The bloc said the proposal will raise P236.7 billion annually just from the 50 richest Filipinos alone.