HomeNewsCaritas Philippines backs higher taxes for luxury goods

Caritas Philippines backs higher taxes for luxury goods

Luxuries are "unnecessary" and those who can afford them "will be less affected by the increased costs,” said Bishop Bagaforo of Caritas Philippines

The social action arm of the Catholic Bishops’ Conference of the Philippines has expressed support for the proposal to impose higher taxes on luxury goods.

“Higher taxes on luxury items can generate revenue without unduly affecting low-income individuals,” said Bishop Jose Colin Bagaforo of Kidapawan, national director of Caritas Philippines.

“These luxuries are also unnecessary, those who can afford them will be less affected by the increased costs,” said the prelate in an interview over Radio Veritas 846.

He said higher tariffs can also “reduce income inequality and provide more funding for government programs and services,” such as state health facilities, farm-to-market roads, and classrooms.”

Rep. Joey Salceda of Albay, an economist, has earlier said that the imposition of taxes on luxury goods is being studied in Congress amid calls to impose higher taxes on the super rich.

The legislator said at least PhP12.4 billion worth of taxes are expected to be generated by the proposal to tax luxury items including cars priced above PhP5 million, beverages above PhP20,000 per bottle, and leather goods worth more than PhP50,000 per unit.

Independent advocacy group IBON Foundation, however, said that while higher taxes on luxury goods is desirable, it cannot be a substitute for a wealth tax, which could raise more revenues for social and economic development.

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IBON argued that a luxury tax is an attempt to distract the public from the urgency and necessity of taxing the wealth of the country’s few billionaires.

It said that a wealth tax can generate way more revenues of about PhP468.8 billion annually. This will come from close to 3,000 billionaires in the country who collectively have P8.2 trillion in wealth, IBON said.

Based on IBON’s longtime proposal, there will be a graduated wealth tax of one percent on wealth above PhP1 billion, two percent on over PhP2 billion, and three percent for more than P3 billion.

The group maintained that the proposed tax on luxury consumption goods generates negligible revenues compared to a billionaire wealth tax.

IBON said that the wealth tax is a more effective way to raise revenues for promoting social and economic development and is likewise a social justice measure that redistributes wealth even if only incrementally.

For his part, Father Antonio Labiao Jr., executive director of Caritas Philippines, stressed the need for transparency “about how taxes are collected and used.”

The priest said Filipinos should have access to information on the taxes they are paying. “Additionally, taxes must be used to fund programs and services that are responsive to the basic needs of the citizens,” he said.

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