Higher tax on luxury items gains support

The Philippine Chamber of Commerce and Industry (PCCI) is pushing for the imposition of higher taxes on luxury items, but not the “wealth tax”, to help address the country’s huge budget deficit, according to a report by Manila Bulletin.

PCCI President George T. Barcelon raised this proposal in reaction to clamor to impose wealth tax, particularly at the recently concluded World Economic Forum in Davos.

Instead, Barcelon said the government should look into the imposition of higher tax rates on luxury items. These include branded bags and watches and the high-end smart phone models.

“Really depends on the market, those who are buying, and if the market would still continue to buy even if the tax are higher or where price do not make a difference them,” he said. For instance, he said, luxury cars are already heavily taxed.

He further added that this kind of taxation on luxury items should be imposed over a certain period only, not in perpetuity.

With that, he also cautioned that government should not impose exorbitant tax rate otherwise these luxury products will only find their way into the gray market.

“We have to balance because they might be smuggled also, we might lose whatever revenues we are looking,” he explained.

All items have luxury segment, he pointed out, that would qualify for higher tax rate. “Government should look at product segments that are bought by a particular market where price does not matter,” Barcelon reiterated.

In opposing the planned “wealth tax”, Barcelon said this would be a disincentive to people who work hard and is discriminatory. In addition, he said, this would go against the drive of the government to attract foreign direct investments.

“Am against wealth tax because wealth tax is a broad brass stroke because people work hard for their money and we are trying to attract foreign investors,” he said.

Taxing the rich was also raised at the recently concluded WEF.

Oxfam said in a report released on the opening fo the WEF, that the richest one percent of people on Earth made almost two-thirds of the new wealth created since the pandemic began.

The group proposed to increase tax on billionaires’ income.

The world’s richest have absorbed a greater proportion of global wealth during the pandemic and over the past decade, while global poverty has increased for the first time in 25 years, according to the report, titled “Survival of the Richest.”

Oxfam also called on world leaders to significantly increase taxes on the ultrawealthy. This includes higher taxes on income and capital gains, which it argued are the most important source of income for the rich in most countries.

“As a starting point, the world should aim to halve the wealth and number of billionaires between now and 2030, both by increasing taxes on the top 1% and adopting other billionaire-busting policies,” the report said. “This would bring billionaire wealth and numbers back to where they were just a decade ago in 2012.”