Albay Rep. Joey Salceda (File photo)
MANILA – The House Ways and Means Committee is studying the imposition of non-essential goods taxes on several lines of luxury items, its chairman said on Monday.
Albay Rep. Joey Salceda said this is in response to calls from international organizations such as Oxfam International for the Philippine government to tax the country’s super rich.
“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. 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 said.
He said the panel is considering passing a measure that would expand the coverage under Section 150 of the tax code, as amended, which currently imposes a 20 percent tax on the price of jewelry, perfumes and yachts.
"We will discuss which items can generate the most revenue for the least effort," he said.
He noted that the committee is particularly studying taxing wristwatches, bags and other leather items above PHP50,000; private jets; luxury cars above PHP5 million; the sale of residential properties above PHP100 million; beverages above PHP20,000 per bottle; and traded paintings above PHP100,000, among other items.
“Generally, the point of the debate will be what can be universally considered ‘luxury.’ 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," he said.
He said 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. And we won’t have to create new taxes, because we are supposed to value those properties correctly anyway,” Salceda added.
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.”
He agreed that the levels of inequality in the country are "obscene", not just in income or wealth, but also in the concentration of economic power.
Salceda, however, warned 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. Driving them away by taxing highly mobile assets solves nothing for the country," he said.
He said the reforms should focus on taking from the rich a fairer share and lowering tax rates "for everybody else".
“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,” Salceda said. “That’s definitely an option – if we can raise enough revenues from the purchases of the rich." (PNA)
