WHILE the proposal to tax luxury items is desirable, it is not a good substitute for a wealth tax on the country’s billionaires, according to nongovernment Ibon Foundation Inc.
House of Representatives Ways and Means Committee Chairman Jose Sarte Salceda estimates that a “Louis Vuitton” tax could generate P12.4 billion in revenues, a wealth tax can raise more than 10 times the amount.
However, Ibon said a billionaire-wealth tax can raise at least P468.8 billion annually from the country’s estimated 2,945 billionaires who collectively have P8.2 trillion in wealth.
“A higher consumption tax on luxury goods is desirable but is not a substitute for a wealth tax, which can raise far more revenues for social and economic development,” Ibon said.
The proposed “Louis Vuitton tax” will be levied on the purchase of luxury lifestyle items such as jewelry and bags, wines and art, cars, private jets, residences and others.
The wealth tax, meanwhile, is a tax on not even one-third of one-thousandth of a percent (0.0026 percent) of the country’s population and will still leave them with P7.7 trillion.
Ibon proposed a graduated wealth tax of 1 percent on wealth above P1 billion, 2 percent on wealth above P2 billion and 3 percent on wealth above P3 billion.
“These are very incremental taxes that will, nonetheless, raise substantial revenues for the government while still leaving billionaires with more than enough for their luxurious lifestyles and businesses,” Ibon said.
Ibon said a billionaire-wealth tax will play a vital role in addressing worsening wealth inequality in the country. Citing data from Credit Suisse AG, Ibon said the median wealth per adult in the country is at around P140,000 ($2,557.87 at current exchange rates) as of 2021, which means that half of Filipinos have wealth less than this.
The group also initially estimates at most that there are around 10 million Filipinos with P1 million or more in wealth out of a population of over 110 million.
Ibon said, converted to pesos using the average exchange rate for 2022, the wealth of the two richest Filipino billionaires are over three million times and over two million times the median wealth, respectively.
Using data converted into pesos from Forbes & Co., Ibon said the two richest individual Filipino billionaires Manuel B. Villar Jr. and Enrique Anselmo K. Razon Jr. are worth P424.9 billion and P305.1 billion, respectively.
They are followed by the following: the Sy siblings who together have P686.4 billion; the Gokongwei siblings, P168.9 billion; and, the Aboitiz family, P158 billion.
The billionaire-wealth tax proposes to redistribute a small sliver of wealth from the top 0.003 percent of the population to the majority.
It will provide the government with additional resources to invest in long underfunded but essential public services such as education, health, housing and social protection, including emergency cash assistance.
It can also give support to micro, small and medium enterprises, which spur inclusive economic development, Ibon said.