Growing billionaire wealth amid increasing poverty, worsening joblessness, and stagnant wages shows that it’s high time for the Marcos Jr administration to heed calls for a wealth tax on the country’s billionaires. This can be a substantial source of revenues for urgently needed income support and health services which are both being cut in the proposed 2024 national government budget. Economic growth can also be spurred with greater support for small farms and businesses.
A billionaire wealth tax can substitute for many consumption taxes that disproportionately burden millions of Filipino families struggling with high prices and low incomes. It can also signal the reversal of government policy to make the tax system more regressive especially since the tax reforms started by the previous Duterte administration and being continued today.
The recently-released Forbes Philippines’ 50 Richest list shows how much more affordable a modest wealth tax is for the country’s super-rich. Converted at prevailing exchange rates, the Php3.95 trillion net worth of country’s 50 richest reported in 2022 increased by 12.5% to Php4.44 trillion in 2023. The billionaire wealth tax proposed in Congress would have raised Php259.4 billion on this wealth and still leave them with Php4.18 trillion which is still more than their net worth reported in 2022.
The proposed wealth tax on the super-rich levies a modest 1% on wealth over Php1 billion, 2% over Php2 billion and 3% over Php3 billion.
Forbes reported oligarch wealth tax growing from 2022 to 2023. For instance, the wealthiest Sy siblings’ net worth grew by US$1.8 billion from US$12.6 billion to US$14.4 billion from their businesses in various industries. The net worth of Manuel Villar, the second wealthiest, increased by US$1.9 billion from US$7.8 billion to US$9.7 billion mainly from his family’s real estate business. Third wealthiest Enrique Razon’s net worth meanwhile rose by US$2.5 billion from US$5.6 billion to US$8.1 billion from his logistics enterprise.
The total wealth tax take from the country’s 3,000 billionaires is estimated by IBON to be at least Php502 billion annually, including the Php259.4 billion just from the country’s reported 50 richest Filipinos. This direct wealth tax is a much more sympathetic and much bigger source of government revenues than, for instance, the various indirect consumption taxes being proposed by the Marcos Jr administration. It means to raise barely Php100 billion from taxing digital services, single-use plastics, sweetened beverages and junk food.
This budget season is an opportune time to press for a more progressive tax system that charges taxes according to capacity to pay rather than political and administrative convenience for the government. A billionaire wealth tax will generate funds to improve the country’s social services and social protection, lessen the national government deficit, and moderate public debt.