The proposed expansion of the non-essential goods tax, which would see luxury good items taxed more, would generate st least P12.4 billion in annual revenue that could be funneled into supporting the local creative industry, Albay 2nd District Joey Salceda said on Wednesday, Jan. 18.
In a statement, the House Ways and Means chair explained that he is targeting “non-essential goods whose prices are beyond the reach of the bulk of consumers, and which are not significant or important inputs to other value-adding industries.”
“I’m looking at a short list of additional items in this Louis Vuitton Tax. Basically, the aim is to find some way to tax the rich consistent with the constitutional principle of progressivity in taxation. For now, my short list will generate P12.4 billion at least,” he said.
His proposed expansion of the non-essential goods tax would include wristwatches, bags, and other leather items above P50,000, as well as luxury cars above P5 million in price, private jets and residential properties above P100 million per unit, and beverages above P20,000 per bottle.
The non-essentials goods tax will be on top of all other taxes, such as the automotive excise tax, value-added tax (VAT), and other taxes on the sale of residential properties.
“Other items, such as sales of shares in exclusive membership clubs (Manila Polo Club, Tagaytay Highlands, etc), jacuzzis, furs, all regatta equipment, and antiques are also being considered, but the revenue potential could be limited, and enforcement costs could outweigh revenue potential,” Salceda added.
The veteran legislator insisted that increasing the non-essentials goods tax rate to 25 percent or 30 percent on top of expanding the list can generate between P15.5 to P18.6 billion in annual additional revenues.
READ: House mulls higher taxes on luxury goods — Salceda
Meanwhile, Salceda is also studying the possibility of using the additional revenues from the expansion of non-essential goods tax to boost the local creatives sector.
He explained that the revenues could be “funneled into the country’s creative sectors, particularly our own creators of luxury items.”
“I think it’s time the Philippines becomes more than just a part of the whole assembly of luxury goods,” Salceda said.
Companies who can fully design and manufacture luxury bags and other ‘creative products’ in the country might receive power cost or labor cost subsidies.
“I am also looking at infusing the Creative Industry Development Fund with revenues from this new revenue stream,” he added.
The move to tax the rich came after international non-government organization Oxfam International called for the Philippine government to impose higher taxes on the country’s super-rich.
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.”