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MANILA, Philippines — Rep. Joey Salceda, chair of the House ways and means committee, is pushing for higher taxes on “luxury” or nonessential goods on top of other current taxes, a move which may earn the government around P15 billion in additional revenues.
House Bill No. 6993 filed on Monday by Salceda seeks to amend the National Internal Revenue Code by increasing the nonessential goods tax from 20 percent to 25 percent and to expand its coverage to more luxury items.
The bill proposes a 25-percent luxury tax on wristwatches, bags, wallets, and belts valued at more than P50,000; beverages worth more than P20,000 a liter; antiques valued at P100,000; paintings valued at more than P1 million;
Automobiles valued at more than P10 million; private aircraft and parts except those for the use of the Philippine government, airlines, and logistics companies; and the sale of residential properties worth above P100 million.
With an estimated sales of P62.1 billion from these luxury goods, Salceda projected that the government may earn P15.5 billion in revenues from the luxury tax.
“The nonessential goods will be on top of all other taxes. The tax on luxury cars, for example, will be on top of the automotive excise tax, which is arguably a pollution and congestion tax but not yet a luxury tax. The tax on luxury residential properties will be on top of value-added tax and other taxes on its sale,” Salceda said in the bill’s explanatory note.
He noted that the “single most crucial flaw of the country’s tax system is its failure to tax the rich.”
Salceda, an economist turned lawmaker, said this “exacerbates inequality and promotes the concentration of financial resources crucial to the economy in the hands of very few individuals.”
Although wealth taxes based on the net worth of the “super rich” have been proposed, but the problem is that “capital is extremely mobile and many countries offer ‘tax-haven’ passports to extremely wealthy individuals.”