Amid calls to impose higher taxes on the rich, Albay 2nd District Rep. Joey Salceda on Monday, Jan. 16, revealed plans to tax luxury items, such as wristwatches, bags, beverages, and paintings, among others.
This came after international non-government organization Oxfam International called for the Philippine government to impose higher taxes on the country’s super-rich as President Ferdinand “Bongbong” Marcos Jr. and his reportedly 70-man delegation head to Davos, Switzerland to attend the World Economic Forum (WEF), where he will address the world’s richest individuals and countries.
In particular, the veteran lawmaker and House Ways and Means chair is looking at expanding Section 150 of the current tax code, as amended, which currently imposes a 20 percent tax on the prices of jewelry, perfumes, and yachts.
“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,” he said.
“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 explained.
The committee is studying the possibility of imposing more taxes on wristwatches, bags, and other leather items priced at more than P50,000, as well as private jets and luxury cars above P5 million.
The sale of residential properties above P100 million, beverages priced P20,000 per bottle, and traded paintings worth above P100,000, among other items, might also see their taxes increase.
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Salceda admitted that the “point of the debate” would be what will “universally” be considered as luxury items.
“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,” the lawmaker said, adding that it is also essential to ensure the correct valuation of real property in the country to “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,” he stressed.
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.”
The lawmaker agreed with the evaluation since “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. And it leads to having a cartel pretty much in every essential industry.”
However, he thumbed down taxing the capital used by the super-rich in their businesses because that could drive the rich away.
“But, 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,” Salceda explained, adding that “taxes on the rich could lead to lower taxes on (the) working class.”
“If we can raise more consumption taxes on luxury items, we might be able to begin lowering the VAT for most other things,” he emphasized.