Tax the rich? Salceda prefers taxes on luxury goods instead

Albay Representative Joey Salceda on Monday suggested taxing luxury items instead of the rich as proposed by Oxfam Pilipinas in its latest report.

In a statement, Salceda said his committee — the House Committee on Ways and Means, where all tax measures are assigned — is studying the imposition of non-essentials goods taxes on several lines of luxury items.

"I can’t target one specific section of the population for what they supposedly own. They will simply apply for foreign citizenship and move their money to other countries that will be happy to take them," Salceda said.

"But wealth induces luxurious lifestyles, or what economists call conspicuous consumption. We can slap taxes on those items since they won’t mind paying them anyway."

According to Salceda, an item is considered a "luxury" if it is beyond reasonable reach of the vast majority of the population, and is not necessary for any essential function,” Salceda said.

Among the items Salceda said they are studying to tax are wristwatches, bags, and other leather items above P50,000; private jets, luxury cars above P5 million; the sale of residential properties above P100 million; beverages above P20,000 per bottle; and traded paintings above P100,000, among others."

At present, a 20% tax is already imposed on the price of jewelry, perfumes, and yachts in accordance with Section 150 of the Tax Code.

"The committee will definitely pass a measure expanding that list, but we will discuss which items can generate the most revenue for the least effort," Salceda said.

According to Oxfam, nine richest Filipinos have more wealth than the bottom half, or 55 million, of the population.

Given the findings, Oxfam called on the Philippine government to impose taxes on the country's rich since imposing a wealth tax can raise additional government revenue of $3.8 billion a year, which it said is already a significant amount to hike the country's health budget.

But according to Salceda, taxing much needed capital will lead to more problems than solutions.

"I want the rich to keep their money in the Philippines and spend it on our development. Driving them away by taxing highly mobile assets solves nothing for the country," he said.

Salceda also said that the correct valuation of real property in the country is also an essential step in ensuring that the rich are taxed properly.

"Instead of taxing highly mobile or movable capital such as cash, stocks, bonds, and other financial instruments, we can tax luxury real assets better. And we won’t have to create new taxes, because we are supposed to value those properties correctly anyway," he said. —KBK, GMA Integrated News