To Tax The Rich or not to? As Shakespearean as it sounds, that is the question—at least on the part of the lawmakers.
“Tax The Rich” has been the battle cry of the representatives from the Makabayan bloc during late September.
Members of the said alliance have filed House Bill No. 10253 on September 20, 2021, as the government continues to scour for revenue amidst the pandemic and the budding 2022 national elections.
Also called the Super Rich Tax Act of 2021, HB 10253 seeks to tax 1% on individuals whose taxable assets are above P1 billion, 2% for P2 billion, and 3% for P3 billion and above. Aside from that, the house bill states that 60% of the revenues collected would benefit the health sectors for medical assistance and the Health Facilities Enhancement Program; while the remainder 40% would be exclusively used for government’s anti-poverty measures such as
education, social protection, employment, and housing for the poor.
“Philippine taxation for the longest time has been largely collected from what people pay for, what they consume, or from what they earn, and [has] never implemented a tax on large fortunes,” states the bill.
This bill was made in response to the collective wealth of the 50 richest Filipinos which grew 30% to $79 billion (around P3.9 trillion) despite the COVID-19 pandemic, as per the 2021 Forbes’ Philippines Rich List. Through the proposed act, lawmakers said the country would at least P236.7 billion would be collected annually. This also follows the proposed wealth tax from the Freedom of Debt Coalition that aims to scour at least P112 billion from the said batch of wealthy Filipinos.
“The billions in revenue from this tax would aid the government in pursuing its anti-poverty measures and other social programs that would help in closing the widening divide between the rich and poor,” the bill’s explanatory note reads.
Following the filing of HB 101253, the current administration’s chief economic manager said this may drive the capital out of the country and would halt the progress of creating its wealth.
While Finance Secretary Carlos Dominguez III said the Department of Finance (DOF) will study the Makabayan bloc’s House Bill (HB) No. 10253, his initial comment was “a wealth tax will drive capital out of the Philippines.”
Dominguez’s statement, however, received rebuttals from analysts; saying it will not result in loss of investments.
ING Bank Manila senior economist Nicholas Antonio Mapa, told the Manila Times, “As for leading to capital flight, we are unsure whether the ultra-rich citizens of the Philippines would opt to withdraw their capital en masse as authorities always cite the ‘solid macro fundamentals’ of the country, which should offer investors more than adequate return for their investments.”
“I think that taxing the ‘super rich’ at this point is counter to the tax reform program that has been pushed by this administration from the beginning,” said Ruben Carlo Asuncion, chief economist of the Union Bank of the Philippines. “Remember that there have been a lot of efforts at reducing taxes (both corporate and individual ones) to help investment and consumption in general.”
While taxing the rich has been in question for a couple of weeks, Asian Consulting Group can answer questions about your tax problems—and can even fix them. Consult us now by sending us an email at consult@acg.ph
REFERENCES:
Aguilar, M. (Sept. 20, 2021). Tax the rich: Makabayan bloc seeks at least P236 billion from wealthy Filipinos. Rappler. https://www.rappler.com/business/makabayan-bloc-files-bill-seeking-additional-taxes-billionaires
de Vera, B.O. (Sept. 20, 2021). Dominguez: ‘Wealth tax will drive capital out of the Philippines’. INQUIRER.net. https://business.inquirer.net/331006/dominguez-wealth-tax-will-drive-capital-out-of-the-philippines
Caraballo, M.U. (Sept. 22, 2021). Analysts: ‘Super rich’ tax will not result loss in investments. The Manila Times. https://www.manilatimes.net/2021/09/22/business/top-business/analysts-super-rich-tax-will-not-result-loss-in-investments/1815661
