Neda backs proposal to tax luxury goods
MANILA, Philippines — The National Economic Development Authority (Neda) on Tuesday said it supports the proposal to impose taxes on luxury items, saying this will help ramp up government revenue.
Neda Undersecretary Rosemarie Edillon said taxing luxury items would be part of the government’s efforts to make the country’s tax system “simpler and fairer.”
Theoretically, she said, it is a tax on wealth and its imposition will help increase the state’s revenue collection.
“It is also a way for the more fortunate ones na makatulong (to be of help),” Edillon added.
However, she acknowledged that imposing taxes should correspond with good governance so that the public would be at ease knowing where their taxes are going.
“Malaman nila na napupunta naman sa maayos na mga proyekto, na talagang pang-development and also for poverty reduction siyempre,” the Neda official said.
(They should be assured that their taxes are going to good development projects and to poverty reduction measures)
House Committee on Ways and Means chairman and Albay 2nd District Rep. Joey Salceda said his panel is studying the imposition of non-essential goods taxes on several lines of luxury items instead of the rich.
He said this is in response to calls from international organizations such as Oxfam International for the Philippine government to impose taxes on 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 in other countries that will be happy to take them,” he said in a statement on Monday.
“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,” he added.
He said an item is considered a “luxury” if it is beyond reasonable reach of the vast majority of the population and is not necessary for any essential function.”
Among the items that the committee is studying to tax are wristwatches, bags, and other leather items above P50,000; private jets, and luxury cars above P5 million; the sale of residential properties above P100 million; beverages above P20,000 per bottle, and traded paintings above P100,000.
Currently, a 20-percent tax is imposed on jewelry, perfumes, and yachts in accordance with Section 150 of the Tax Code.
“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,” Salceda said.
Oxfam earlier called for taxes at rates that progressively redistribute wealth and reduce extreme inequality, specifically aiming to cut the number of billionaires by half by 2030.
The aid group said this could be achieved “by increasing taxes on the top 1 percent and by adopting other billionaire-busting policies.”
Hiking taxes for the rich, it said, can raise additional government revenue of $3.8 billion a year, which is already a significant amount to hike the country’s health budget.
However, Salceda said 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.
Salceda also said that the correct valuation of real property in the country is also essential in ensuring that the rich are taxed 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,” the Albay lawmaker said.
