Tax on ‘super rich’ seen to yield P237 billion yearly

MANILA, Philippines — Necessary tax reform, especially those to be imposed on the extremely wealthy, would give the government additional revenues and help accelerate economic recovery, an independent think tank said.

In a forum yesterday, research and advocacy group IBON Foundation said passing a wealth tax or “super-rich tax” would yield about P237 billion every year.

IBON executive director Sonny Africa pointed out that the combined wealth of the 50 richest Filipinos alone is significantly more than what 71 million poorest Filipinos own.

The think tank proposed a wealth tax of one percent on wealth above P1 billion, two percent for those above P2 billion, and three percent over P3 billion.

The wealth tax would be on top of other taxes on income, interest earnings, dividends, the sale of stocks, or other capital gains.

“By our last estimate, only about 3,000 Filipinos have wealth over P1.5 billion. Basically just 3,000 richest Filipinos out of the 109 million Filipinos. This is something that everyone should support,” Africa said.

“It is very focused and it corrects income and wealth inequality in the country. The government will significantly earn from this,” he said.

While securing additional revenues that can be used for economic recovery is such a promising idea, Africa said the caveat lies on how influential the richest Filipinos are to the very people who will craft and pass the law.

It is no secret that many oligarchs are funding politicians especially during elections in hopes that legislative measures that will be favorable for them will be passed once they secure a seat in Congress, he said.

And with the national election coming up next year, Africa said the likelihood of passing a “super-rich tax” may be out of the picture even when the vast majority of Filipinos would benefit from it.

“If the government really wants to earn the money from where the money is, they can do it. But will they? For as long as they are beholden to certain political interests and with elections coming up, it’s not very likely,” Africa said.

“A wealth tax is both an economic and political measure,” he said.

IBON maintained that it is necessary to drill down to the basic point, that there’s too much wealth in the hands of the few.

And these few are controlling Philippine politics and by extension, the Philippine economy as well to make themselves wealthier.

“Many are already complaining why the economy is being run for the interest of the few. The wealth tax will create funds for many Filipinos,” Africa said.

“It also takes the edge off, even a little bit, to those who have earned so much, and it will establish democratic politics over personal wealth and profit,” he said.

In a February blog, international tax policy experts of Manila-based Asian Development Bank said developing Asian economies, including the Philippines, will need to raise taxes once the pandemic abates and a possible solution lies in taxing property and wealth.

“Taxing the wealthy, many of whose incomes have been largely unaffected or even enhanced by the crisis, needs to be part of the solution,” they said.

Over the past two decades, the Asia Pacific region has undergone an economic transformation but experts said it has also brought with it a surge in income inequality.

“A widening wealth gap between the ‘haves’ and the ‘have-nots’ and the concentration of wealth and power in the hands of a few, could erode social cohesion, threaten political and economic stability and, consequently, undermine investors’ confidence,” they said.