With the Philippines still recovering from the debilitating economic effects of the COVID-19 pandemic, the government is finding ways to generate more revenue for projects.
Albay 2nd District Representative Joey Salceda has a solution – raise taxes on non-essential goods, sometimes referred to as luxury items, and add more non-essential goods that can be taxed.
Salceda filed House Bill (H.B.) 6993 on January 2023. It seeks to revise Section 150 of the National Internal Revenue Code of 1997.
The proposed measure adds new and used cars worth at least ₱10 million to the list of non-essential goods. As of press time, the tax code includes only jewelry, perfumes, and yachts.
H.B. 6993 also raises the tax on non-essential goods from 20 to 25 percent. The amount is computed based on the item’s wholesale price or importation value, net of excise and value-added taxes.
“This measure sees a non-essential good as a good whose prices are beyond the reach of the bulk of consumers, and which are not significant or important inputs to other value-adding industries,” the economist-legislator said.
Should this push through, the base price of high-end cars like the recently launched Aston Martin DBX707 could theoretically go from ₱33.5 million to around ₱41.8 million.
“The single most crucial flaw of the country’s tax system is its failure to tax the rich,” Salceda said in the bill’s explanatory note. “This failure exacerbates the inequality and promotes the concentration of financial resources crucial to the economy in the hands of very few individuals.”
President Ferdinand Marcos Jr. said in a February 7, 2023 speech that Filipinos must pay their taxes fully and on time to support the country’s economic recovery.
“It is my confidence that you will continue to cooperate, collaborate, and coordinate with the government on how to improve the experience of our tax collection system,” he said at the launch of the Bureau of Internal Revenue’s (BIR) national tax campaign.
However, the Marcos family also faces a hefty ₱203-billion bill from the BIR. The amount is for the tax on the estate of the President’s father, the late dictator Ferdinand Marcos who died in 1989.
The President said on September 2022 that the case should be reopened because his family never had the chance to argue against it.
Over ₱15B in additional revenue
H.B. 6993 also adds the following items as non-essential goods subject to the proposed 25 percent tax:
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Wristwatches valued more than ₱50,000
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Bags, wallets, and belts valued more than ₱50,000
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Residential properties above ₱100,000 a square meter
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All beverages above ₱20,000 a liter
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Paintings above ₱1 million sold by parties other than the artist
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Antiques valued at ₱100,000 an item
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All private aircraft and parts, except those used by the Philippine government, airlines and logistics companies
Salceda said targeting “luxurious consumption” and immovable assets like land is one of the easiest ways to tax wealth.
“Consumption taxes can be imposed at the point of importation or sale, making them easier to enforce,” he said.
“An increase in real property tax rates across the board will be painful and counterproductive, but proper valuation of luxury real estate (such as those in gated subdivisions and golf courses) will help increase revenues and make the tax system more progressive,” Salceda added.
The lawmaker said if H.B. 6993 is passed, the government can collect an additional ₱15.5 billion in taxes. However, a counterpart bill has not yet been filed in the Senate.
Do you think it’s fair to hike taxes on rich people’s toys? And will the super-elite in Congress let a law like this pass?
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Source: Tax the rich! House bill seeks 25% tax on all cars worth ₱10M and up