HOTSPOT
If we’re short of funds for much needed vaccination and health care and to propel the pandemic-struck economy, then we should look no further than the suggestion of the think-tank Ibon and the Makabayan bloc in Congress: Tax the billionaires!
Surely, the working people and entrepreneurs don’t have the capacity to pay any new tax. In fact, they badly need aid and stimulus funds in order to survive, what with the botched pandemic response that has needlessly prolonged or worsened our national situation since March, 2020.
A very small subset of the population however have not only shielded themselves from the pandemic and the inept state response to it. They even profited from it.
Ibon says that there are now 2,919 Filipino billionaires with some P8.1 trillion in combined wealth.
“They comprise less than 0.003 percent of the population but hold 16 percent of the nation’s wealth. Taxing just these billionaires with a wealth tax of one percent on wealth over P1 billion, two percent over P2 billion and three percent over P3 billion can raise some P467.1 billion in revenue for the government’s social services, welfare and other programs,” said Ibon.
Referring to published reports, Ibon adds that “the reported net worth of the 50 richest Filipinos increased even amid the pandemic to reach P3.9 trillion or $79 billion in 2021. A wealth tax on just them can raise up to P224 billion in revenues.” Would the billionaires bleed so much money that they’d become poor because of this proposed tax? No. They would remain billionaires or multi-billionaires. It is not as if their properties and bank accounts would be raided. The proposed tax seeks only one to three percent of their total wealth. They still get to keep 93 to 99 percent of their money, private jets, yachts, mansions, resorts, jewelry and golf club memberships and other wealth.
Many would also argue that such a tax would ultimately be good to the super rich themselves. It is because a better-served and healthier nation would create more wealth for all, including the wealthy.
In their explanatory note to House Bill 10253, or the Super Rich Tax of 2021, the Makabayan bloc said that “Philippine taxation for the longest time has been largely collected from what people pay for, what they consume, or from what they earn, and never implemented a tax on large fortunes.”
If passed, the bill provides that revenues from the billionaire tax would go to: Medical assistance and the Health Facilities Enhancement Program (60 percent); and education, social protection, employment, and housing for the poor (40 percent).
“The billions in revenue from would aid the government in pursuing its anti-poverty measures and other social programs that would help in closing the widening divide between the rich and poor,” the Makabayan lawmakers added.
Per Ibon, revenues from the billionaire tax would be “more than enough” to provide adequate aid for workers, farmers and for micro, small and medium-scale enterprises.
Ibon crunched the numbers: P186 billion for emergency aid for 18.6 million households at P10,000 each; P101 billion for MSMEs as wage subsidy to support P100/day wage increase for three months; and P220 billion for supporting farmers.
Both Ibon and Makabayan are also urging government to redirect non-essential appropriations including certain infrastructure, counter-insurgency funds like the P28.1-billion budget for the NTF-ELCAC, and automatic debt payments.
Obviously, there are other truly urgent and essential needs that could be met if these appropriations are redirected. The NTF-ELCAC budget could be abolished and the budget entirely redirected to the Research Institute for Tropical Medicine and the Philippine Genome Center to expand these agencies’ capabilities, acquire equipment and recruit and keep personnel.
Taxing the super-rich is not new. Many countries have done it as a means to address gross income and wealth inequality, and to raise revenues so that governments could deliver adequate services to citizens. It is a sound economic policy amid the pandemic that it is not only Ibon, Makabayan, or Bernie Sanders are batting for a wealth tax.
Ask Nobel Prize in Economics winner Joseph Stiglitz, the World Economic Forum (WEF) and the International Monetary Fund. They are also endorse a tax on the super-wealthy.
The alternative is to tax everybody, including the laid-off and the unemployed, underemployed, the shuttered small businesses and others who need help.
The state should help, and ask the billionaires and multi-billionaires for a more fair “ambag.”