‘Tax on luxury goods easy to implement’  

MANILA, Philippines — Taxing luxury items is easier to implement than imposing a wealth tax, according to the National Economic and Development  Authority  (NEDA).

In looking at proposed measures to impose taxes, NEDA Undersecretary Rosemarie Edillon told “The Chiefs” on Cignal TV’s One News last Thursday that there is a need to consider the ease of enforcement or ease of administration of the tax.

For the NEDA, imposing a wealth tax involves a complicated process.

“If it’s a wealth tax, then it’s still difficult to have a determination of the wealth,” she said.

Edillon also said there are laws that would need to be amended.

“There are many laws we need to fix,” she said, citing the Bank Secrecy Law as an example.

In the case of a tax on luxury goods, this is considered easier to implement as these are highly visible.

“It is easy to know if one had or purchased luxury goods,” she said.

Albay Rep. Joey Salceda has said that the imposition of taxes on luxury goods is being studied amid calls  to impose higher taxes on the super rich.

He said at least P12.4 billion worth of taxes are expected to be generated by the proposal to tax luxury items including cars priced above P5 million, beverages above P20,000 per bottle, and leather goods worth more than P50,000 per unit.

Edillon said that while the NEDA considers the proposed luxury tax as a good concept since it is a progressive tax, the agency would wait for the details of the bill to be able to study it and provide recommendations.

Meanwhile, research and advocacy group IBON Foundation said that while higher taxes on luxury goods is desirable, it cannot be a substitute for a wealth tax, which could raise more revenues for social and economic development.

IBON argued that a luxury tax is an attempt to distract the public from the urgency and necessity of taxing the wealth of the country’s few billionaires.

It said that a wealth tax can generate way more revenues of about P468.8 billion annually.

This will come from close to 3,000 billionaires in the country who collectively have P8.2 trillion in wealth, IBON said.

“This is a tax on not even one-third of one-thousandth of a percent of the country’s population and will still leave them with P7.7 trillion,” IBON pointed out.

Based on IBON’s longtime proposal, there will be a graduated wealth tax of one percent on wealth above P1 billion, two percent on over P2 billion, and three percent for more than P3 billion.

“These are very incremental taxes, which will raise substantial revenues for the government while still leaving billionaires with more than enough for their luxurious lifestyles and businesses,” IBON said.

The group maintained that the proposed tax on luxury consumption goods generates negligible revenues compared to a billionaire wealth tax.

IBON noted that the wealth tax is a more effective way to raise revenues for promoting social and economic development and is likewise a social justice measure that redistributes wealth even if only incrementally.

Further, IBON said a billionaire wealth tax will aid in addressing the worsening wealth inequality in the country.

Data showed that median wealth per adult in the country is at P140,000 as of 2021. Only 10 million, at most, out of the current 110 million Filipinos have more than P1 million in wealth.

IBON argued that a billionaire wealth tax targets to redistribute a “small sliver of wealth” from the top 0.003 percent of the population to the majority.

“It will provide the government with additional resources to invest in long underfunded but essential public services such as education, health, housing, and social protection, including emergency cash assistance,” IBON said.

“It can also give support to micro, small and medium enterprises, which spur inclusive economic development,” the group said. – Louella Desiderio