'Louis Vuitton tax' seen to raise P12 billion, says Salceda

House ways and means panel chairperson Joey Salceda of Albay on Wednesday said his proposed expanded imposition of luxury tax will be identified as "Louis Vuitton tax" due to some Filipinos' patronage of the product.

Salceda said the additional taxes on luxury goods such as watches, cars, private jets, residential properties and expensive wine, is expected to generate at least P12.4 billion worth of government revenues, Salceda said.

“The aim is to find some way to tax the rich consistent with the constitutional principle of progressivity in taxation. For now, my shortlist will generate P12.4 billion at least,” he said in a statement.

Interviewed separately on GMA's Unang Balita, he made an enumeration of the luxury items bought by the rich.

"What are the ones being consumed by the rich? Luxury watch is at P4.8 billion, luxury cars is at P11.5 billion. Private jets...it is around P200 million, while sale of residential properties is around P100 million," Salceda, an economist, said.

"Wine is at P10.3 billion, but for Louis Vuitton, it is at P11.3 billion. That is why Louis Vuitton's owner had said that Filipinos are the ones who spend the most on their product. So we will call it the Louis Vuitton tax," he added.

Salceda made the push for his proposal after non-profit group Oxfam International's Survival of the Richest Report showed nine richest Filipinos have more wealth than the bottom half (55 million) of the population.

Given the findings, Oxfam called on the Philippine government to impose taxes on the country’s rich people to raise additional government revenue of $3.8 billion a year which is already a significant amount to hike the country’s health budget.

Salceda said the luxury items are non-essential goods whose prices are beyond the reach of the bulk of consumers, and which are not significant or important inputs to other value-adding industries.

Further, he said that the non-essentials goods tax 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 VAT and other taxes on its sale,” Salceda said.

“Other items, such as sales of shares in exclusive membership clubs (Manila Polo Club, Tagaytay Highlands, etc), jacuzzis, all regatta equipment, and antiques are also being considered, but the revenue potential could be limited, and enforcement costs could outweigh revenue potential,” he added.

The additional revenues to be generated can be earmarked to the country’s creative sector, particularly the Philippine-made luxury items.

“I think it’s time the Philippines becomes more than just a part of the whole assembly of luxury goods, and we should also look at the possibility of power cost or labor cost subsidies for companies who can fully design and manufacture luxury bags and other creative products in the country,” he added.

At present, Section 150 of the Tax Code imposes a 20% tax on the price of jewelry, perfumes, and yachts.—LDF, GMA Integrated News