Wealth tax law could hike revenues by $9.2B
IF the Philippines legislates a progressive annual wealth tax, civil society groups estimate that the “super rich” would be able to increase the country’s revenues by $9.2 billion annually.
A study by the Fight Inequality Alliance, Institute for Policy Studies, Oxfam, and Patriotic Millionaires bases the estimate on a wealth tax of 2 percent on wealth over $5 million; 5 percent on wealth over $50 million; and 10 percent over $1 billion.
A less progressive wealth tax would still yield a significant amount of $6.3 billion annually. This is based on tax rates of 2 percent on wealth over $5 million; 3 percent on wealth over $50 million; and 5 percent over $1 billion.
“The insane reality is that whilst billions face a daily struggle to survive during this pandemic, billionaire wealth is spiraling out of control. This cannot be right,” said Jenny Ricks, Global Convenor of the Fight Inequality Alliance.
“For years Davos has shown us the elites cannot and will not end the virus of inequality they have helped to create. We now have the rare opportunity to create the economy and society we want but this requires deep system change rather than a rehash of the status quo,” she added.
In the Philippines, the study said, there are 6,685 individuals with a net worth each of $5 million or more, with their combined wealth at a total of $164 billion. There are 365 individuals with $50 million or more each, and a combined wealth of $91.45 billion.
“An annual wealth tax applied to the wealth of multimillionaires and billionaires would raise $6.3 billion a year, enough to increase government health financing by 73 percent or reduce households’ out-of-pocket health budget by 84 percent or enough to reduce poverty at $3.2 a day by 90 percent,” the study stated.
Between 2016 and 2021, the number of individuals with wealth over $50 million increased from 295 to 365 with combined wealth increasing from $75.36 billion to $91.45 billion—a gain of 21.36 percent, adjusted for inflation.
There are 16 Filipino billionaires with a wealth total of $45 billion. Throughout the pandemic, beginning in mid-march 2020, the wealth of the Filipino billionaire class increased $11.68 billion.
The study said billionaires saw their wealth increase by 35.1 percent during the pandemic while 3.7 million people are estimated to have been pushed into extreme poverty in 2020 alone.
The richest person in the Philippines as of November 2021 is Manuel Villar whose wealth has reached $7.5 billion. This means, he owns more wealth than the bottom 33 million Filipinos.
Rounding the top 5 richest Filipinos are Enrique Razon Jr. who is worth $6.6 billion; Henry Sy Jr., $3.6 billion; Tony Tan Caktiong, $2.7 billion; and Andrew Tan, $2.7 billion.
“The wealth of the Asian billionaire class is greater than the GDPS of Indonesia, Malaysia, Myanmar, Philippines and Thailand combined,” the report stated.
Worldwide campaign
THE Freedom from Debt Coalition (FDC) joined thousands of like-minded individuals and organizations in different parts of the world under the Fight Inequality Alliance (FIA) in a week-long series of actions and other activities to put a spotlight on the alarming rise in global inequality and to call for a tax on wealth.
FDC said that as the super-rich continue to accumulate ever more wealth, millions of Filipinos have struggled to make ends meet with the continuing multiple crises since the start of the pandemic.
The toll that the pandemic exacted on the economy and government finances meant that borrowing continued to surge, with outstanding debt nearly doubling to P11.93 trillion as of November 2021 compared to the P6.09 trillion at the end of 2016.
The growth in borrowing came alongside the government’s futile efforts to rein in the growing deficit which, in November 2021 had already reached P1.3 trillion.
“Attempts to keep the budget gap from further widening led in many cases to reduction in support for affected sectors with top officials of the Department of Finance [DOF] and the National Economic and Development Authority [Neda] rejecting proposals for more economic support for the people, calling such measures ‘unfundable,’” FDC said.
Global picture
THE global study also found that 3.6 million people have over $5 million in wealth, with a combined wealth of $75.3 trillion and 183,300 households own over $50 million, for a combined wealth of $36.4 trillion.
There are 2,660 billionaires with a total combined wealth of $13.76 trillion based on Forbes as of November 30, 2021.
An annual wealth tax applied to the world’s richest would raise $2.52 trillion a year. This is based on a graduated rate structure of 2-percent tax on wealth over $5 million; 3 percent on wealth over $50 million; 5 percent on wealth over $1 billion.
A more steeply progressive wealth tax would raise $3.62 trillion a year. This is based on a graduated rate of 2 percent on wealth starting at $5 million; 5 percent on wealth over $50 million; and 10 percent on wealth over $1 billion.
An annual tax on the world’s richest, the study said, would be enough to lift 2.3 billion people out of poverty, make enough vaccines for the whole world, and deliver universal health care and social protection for all the citizens of low and lower middle-income countries (3.6 billion people).