Albay Rep. Joey Sarte Salceda has rejected a proposal to implement a so-called wealth tax, saying it would be counter-productive because the targeted taxpayers would simply flee the country and leave the Philippine government holding the proverbial empty bag.
Salceda, chairman of the powerful House Committee on Ways and Means, recommended instead a scheme to tax luxury goods such as jewelry and pricey signature bags, wines, pieces of arts, cars, private jets, yachts, mansions, etc.
Salceda warned that imposing a wealth tax would only scare away potential investors including billionaires who are already staying in the Philippines.
“If you tax them, they will run away. So what P200 billion are we talking about here? Perhaps, P200 billion somewhere in the Cayman Islands. I think it is very
mobile, there is cryptocurrency. We have a bank secrecy law, one of the strictest in the world, so how can you find that P200 billion?” Salceda said in an ANC interview.
He cited as an example the world’s richest man, French luxury group LVMH CEO Bernard Arnault, who is being offered citizenships by several countries so that he would come and stay there.
“I can name you a lot of countries who want rich people to be their citizen. So it’s contrary. They want rich people to be in their neighborhood for most likely to spend their wealth there, buy villas there and probably invest too by sheer familiarity to their surroundings,” he said.
Salceda said the Philippines also offers long-term investor’s visas to foreign investors who spend as much as $200,000 in the country. Instead of a wealth tax, he said the government can just impose a tax on luxury goods.
“You put cheese in the mouse catcher. I’d rather catch them when they’re eating the cheese,” he said.
“Luxury watches above P50,000, luxury cars, private jets, sale of residential properties above P100 million. Yung mga wine above P20,000. Do you know that this country is drinking P10.3 billion a year on wine worth P20,000per bottle? Leather products above P50,000. We are spending P11.3 billion on that,” Salceda said.
He cited Louis Vuitton leather goods as an example of what could be taxed as much as 32 percent. “We are buying more Louis Vuitton than luxury cars…You have to pay for your conspicuous tendencies,” he said.
The House of Representatives tax policy committee earlier said it is looking to impose higher taxes on more luxury items, but is not keen on the proposal to tax multi-millionaires and billionaires.
Former Bureau of Internal Revenue Commissioner Kim Henares has also said it would be difficult to impose a wealth tax on the richest one percent in the country due to challenges such as the bank secrecy law. Instead of scaring the rich with a hefty wealth tax, a lawmaker is proposing to tax luxury goods instead including jewelry and bags, wines and art, cars, private jets, yachts, residences, and others.
Albay 2nd District Rep. Joey Salceda warned imposing a wealth tax would only scare off potential investors including billionaires who are already living in the Philippines.
“Kapag tinax mo yung wealth, tatakbo yan eh. So anong P200 billion? P200 billion somewhere in the Cayman Islands? I think it is very mobile, may cryptocurrency. We have a bank secrecy law, one of the strictest in the world so how can you find that P200 billion?” he said in an ANC Headstart interview.
He cited as an example the world’s richest man, French luxury group LVMH CEO Bernard Arnault, who is being offered citizenships by several countries so that he would come and stay there.
“I can name you a lot of countries who want rich people to be their citizen. So it’s contrary. They want rich people to be in their neighborhood for most likely to spend their wealth there, buy villas there and probably invest too by sheer familiary to their surroundings,” he said.
Salceda noted the Philippines is offering long-term investor’s visas to foreign investors who spend as much as $200,000 in the country.
Instead of a wealth tax, he said the government can just impose a tax on luxury goods, likening it to putting cheese in a mousetrap.
“You put cheese in the mousecatcher. I’d rather catch them when they’re eating the cheese,” he said.
“Luxury watches above P50,000, luxury cars, private jets, sale of residential properties above P100 million. Yung mga wine above P20,000. Do you know that this country is drinking P10.3 billion a year on wine whose per bottle is 20,000? Leather products above P50,000. We are spending P11.3 billion on that,” he added.
He said a Louis Vuitton for example could be taxed as much as 32 percent. “We are buying more Louis Vuitton than luxury cars…You have to pay for your conspicuous tendencies,” he said.
The House of Representatives tax policy body earlier said it is looking to impose higher taxes on more luxury items, but is not keen on a proposal to tax multi-millionaires and billionaires.
Former BIR Commissioner Atty. Kim Henares also said it would be difficult to impose a wealth tax on the richest 1 percent in the country due to challenges such as the bank secrecy law.
The research group IBON Foundation argued however, that the proposed tax on luxury products is far inferior to a billionaire wealth tax, saying a billionaire wealth tax can “raise at least P468.8 billion annually from the country’s estimated 2,945 billionaires who collectively have P8.2 trillion in wealth.”
The think tank InfraWatch also expressed opposition to the wealth tax as proposed by the Oxfam Pilipinas. PH convenor Teddy Ridon made the appeal in
“The original call of various groups has been to impose taxes on the country’s richest Filipinos, through a wealth tax similar to a White House proposal imposing taxes on unrealized income arising from gains in various securities, said InfraWatch leader Teddy Ridon, himself aformer House ways and means committee member.
“There was never a call to impose taxes on luxury goods and services. And to be clear, these two proposals have entirely different objectives and implementation mechanisms,” he added.
Ridon said that luxury taxes will impinge on the country’s general tourism strategy as an international tourism destination.
“The tourism sector is a pillar of PH economic growth, aside from the semiconductor and BPO sectors. Shopping for luxury, mass affluent and even high street goods and services is part of the overall strategy to attract foreigners to visit the country.”
Ridon said that even vacationing OFWs opt to shop locally for apparel and housewares instead of buying the same items abroad.
“With a luxury tax on a wider swath of consumer goods and services, foreign tourists would probably skip the PH as a destination, if our regional competitors can offer cheaper prices for luxury, mass affluent and high street goods.”
“Conversely, this would compel affluent Filipinos to shop for the same goods and services elsewhere in the world. Instead of spending cash in Filipino stores, they would now opt to spend their money in other international hubs. Affluent Filipinos will most probably do this, because they can.”
Ridon said affluent Filipinos might opt to buy their bags in Paris, their watches in Geneva if it makes more economic sense to fly to Europe and buy luxuries than buying at home.
“The same is true in taxing expensive real estate. Affluent Filipinos will now have to decide whether an apartment in New York, London or Paris makes more sense than spending it on real estate at home, as market prices will now be artificially inflated by luxury taxation.”
