Opposition cites revenue potential of wealth tax vs luxury tax
THE Makabayan bloc of legislators said a wealth tax will generate more revenue than a proposed tax on luxury goods.
The proposed revenue from taxing luxury goods “is very small compared to the billions in income generated by the wealthy,” Deputy Minority Leader France L. Castro said during a news conference on Thursday.
Representative Jose Ma. Clemente S. Salceda, who chairs the House ways and means committee, said on Wednesday that a proposed tax on luxury items will generate about P12.4 billion in revenue each year.
Ms. Castro said that the take from a wealth tax could exceed P400 billion.
In July, Ms. Castro, alongside Assistant Minority Leader Arlene D. Brosas and Kabataan Party-list Rep. Raoul Danniel A. Manuel filed House Bill No. 258, seeking to tax the “super-rich,” defined as those controlling assets of more than P1 billion. The proposed tax rate was 1%, escalating to 2% for wealth above P2 billion, and 3% for wealth exceeding P3 billion. The bill is currently pending with the ways and means committee.
Think tank IBON Foundation called the wealth tax “a social justice measure that redistributes wealth.”
In a statement on Thursday, IBON said that “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. This is a tax on not even one-third of one-thousandth of a percent (0.0026%) of the country’s population and will still leave them with P7.7 trillion.”
Ms. Castro also said that wealthy individuals have the option to purchase luxury items overseas and evade the luxury tax.
Terry L. Ridon, a former legislator and convener of think tank Infrawatch, said that taxing luxury goods would hurt tourism, which he considers “a pillar of Philippine economic growth.”
“Shopping for luxury, mass affluent and even high street goods and services is part of the overall strategy to attract foreigners to visit the country,” Mr. Ridon said in a statement.
Mr. Ridon, a former member of the ways and means committee, added that tourists may avoid the Philippines in favor of other destinations if luxury goods there are cheaper.
He added that workers who depend on the tourism and luxury industries will also be negatively affected.
Mr. Salceda has yet to fill a luxury tax bill in Congress, which will resume session next week. — Beatriz Marie D. Cruz