Groups urge, caution Recto on wealth tax
Finance Secretary Ralph Recto should consider taxing the wealthy if he is hellbent on widening the country’s fiscal space, but such a move may boomerang and cost him his political goals, if any, yet again.
In an open letter to Recto, progressive groups renewed their call for a wealth tax amid the need to raise more revenues for social and economic development, plug the budget deficit, and reduce debt.
While many have called for such a measure, the idea of a wealth tax never really progressed because a lot of lawmakers are backed by the very people they want to tax, the groups said.
Activist group Sanlakas said Recto already has a track record that cost him his senatorial seat in 2007 after he advocated a law that expanded the value-added tax to 12 percent from 10 percent amid an economic crisis in the early 2000s that desperately called for more revenues.
“If he is hell-bent on ensuring that the public coffers are addressed, then he can do another 2006-2007 at the expense of a populist position,” Sanlakas secretary general Aaron Pedrosa said.
“But I don’t think you can afford to earn the ire of billionaires who might be funding your campaign in the elections,” he said.
Asked about his stand on a wealth tax, Recto said in a Viber message that he “cannot comment on anything until we have done our homework.”
Socialist group Bukluran ng Manggagawang Pilipino president Luke Espiritu said that as of now, Recto may not be inclined to pursue a wealth tax, the same way he does not see the need for consumption-based taxes.
“We don’t see any indication that he is taking the direction to tax the billionaires. We could just hope but I don’t think he will be different from (former finance secretary) Ben Diokno,” Espiritu said.
Last year, Sen. Sherwin Gatchalian said he wants higher tax rates for the wealthy following the concept of progressivity. However, no bill was filed noting that the tax is “looking more complicated than expected.”
The closest measure would be Albay Rep. Joey Salceda’s proposal to tax luxury items and non-essential goods among rich Filipinos.
Research and advocacy group IBON Foundation has long been saying that the best way for the government to expand fiscal space and increase urgent spending is with a recurring wealth tax that would cover the country’s 2,900 billionaires.
IBON’s proposal imposes higher corporate income taxes on the country’s 4,500 large corporations and higher personal income taxes on families earning P500,000 or more per month.
Data showed that a one percent tax on wealth over P1 billion, two percent on over P2 billion, and three percent on over P3 billion can potentially generate P497.1 billion in revenues.
Even with such a tax, this will still leave the country’s billionaires with a huge P7.6 trillion in wealth.
Progressive groups emphasized that there is a need to shift the tax burden from ordinary Filipinos to those who have reaped the majority of profits over the years.