The Philippines has never had a wealth tax. For as long as there has been a tax system in the country, taxes have been collected largely from what people pay for what they consume or from what they earn.<\/p>\n\n\n\n
Since the pandemic exploded at the start of the year, much has been said about the unprecedented impacts on people\u2019s health and the economy. It should also prompt a rethinking of the country\u2019s accustomed sources of tax revenues \u2013 and a wealth tax would be historic. <\/p>\n\n\n\n
This helps to shift the tax burden away from regressive\nconsumption taxes towards the handful of families with fortunes in the billions\nor even hundreds of billions of pesos. Over time, a wealth tax would also take\nsome of the edge off the huge economic and political inequality in the country\ntoday.<\/p>\n\n\n\n
Income taxes just won\u2019t work to do this. The truly wealthy don\u2019t\nrely on income to amass more wealth.<\/p>\n\n\n\n
For instance, richest Filipino Manny Villar might have paid\nhimself about Php5-6 million annually as one of Vista Land\u2019s top executives\nbefore. At that rate, it would have taken him many years of working and not\nspending to accumulate his current reported net worth of Php344 billion. Over\n57,000 years, actually. <\/p>\n\n\n\n
The amassed Villar wealth is the foundation and, some would also\nsay, result of the increasingly powerful Villar dynasty \u2013 a \u201cgood dynasty\u201d as senate\nrace-topping Cynthia Villar called it. Former senate president Manny Villar is\nalso president of the Nacionalista Party, the Philippines\u2019 oldest political\nparty. Just an example of how concentrated wealth is democracy-distorting \u2013 it amasses\npolitical power in the hands of a few.<\/p>\n\n\n\n
The minor relevance of income for the really wealthy explains why they don\u2019t populate lists of the country\u2019s highest personal income tax payers. Well, that and their having armies of accountants and lawyers and political connections to escape tax obligation.<\/p>\n\n\n\n
Who are the super-rich?<\/strong><\/p>\n\n\n\n Calling the wealth tax the \u201csuper-rich tax\u201d will make it clear who\nthe only targets are. It\u2019s a tax that should be fully supported by over 99.9%\nof the population because they will definitely not be paying it.<\/p>\n\n\n\n The super-rich are the estimated 596 Filipinos<\/a> with wealth over Php2.5 billion, and\npossibly some 2,200 with wealth of at least Php1.5 billion. The 50 richest Filipinos<\/a> alone have a combined net\nworth of Php4.1 trillion, according to Forbes.<\/p>\n\n\n\n Nit-picking, the country\u2019s \u201c50 richest\u201d are actually the country\u2019s\n65 richest \u2013 the 19 Sy, Ty, Consunji and Campos siblings are still counted as\none under same family names \u2013 as single heirs to their respective fathers\u2019\nfortunes.<\/p>\n\n\n\n In any case, by IBON\u2019s estimates, these 50 richest own more wealth\nthan the poorest 71 million Filipinos combined. That\u2019s one-half of\none-hundredth of a percent (0.005%) of the population owning as much as the\npoorest two-thirds (65%). Such an extreme concentration of wealth makes a\nwealth tax extremely progressive.<\/p>\n\n\n\n The \u2018least-rich\u2019 of the 50 richest Filipinos is valued at Php6.8\nbillion, while the richest at a staggering Php896 billion. <\/p>\n\n\n\n There\u2019s no easy way to visualize Php896 billion. Converted to\nPhp1,000 bills, this would fit into 7,108 balikbayan boxes which, stacked one\non top of the other, would be one-and-a-half times as high as Mayon Volcano.\nLaid end to end, they would reach from the northernmost tip of Batanes to the\nsouthernmost tip of Tawi-Tawi \u2013 78 times. Or are enough to go almost four times\naround the world.<\/p>\n\n\n\n This is huge wealth among an uber-privileged handful, while tens\nof millions of Filipinos barely subsist, while millions of families struggle to\neke out an uncertain living daily, and while hundreds of thousands suffer\ndecrepit hospitals and schools every day.<\/p>\n\n\n\n Which is just to say that there\u2019s more than enough money to provide a decent life for every Filipino now and for generations to come. The super-rich will not really feel if a small portion went to the government as a wealth tax.<\/p>\n\n\n\n A wealth tax of 1% on wealth above Php1 billion, 2% on wealth above\nPhp2 billion, and 3% over Php3 billion is more than reasonable. This will raise\nPhp236.7 billion annually just from the 50 richest Filipinos alone who by any\nstandard are those who can best afford to pay much higher taxes. Applied to\nPhp896 billion, this comes to less than 500 out of 7,108 balikbayan boxes. <\/p>\n\n\n\n The wealth tax would be on top of other taxes on income, interest earnings, dividends, the sale of stocks, or other capital gains the rich are wont to incur.<\/p>\n\n\n\n Challenges<\/strong><\/p>\n\n\n\n The difficulties in designing, passing, implementing and enforcing\na wealth tax are admittedly considerable.<\/p>\n\n\n\n What counts as wealth? This is actually among the trickiest parts.\nThe idea is to tax wealth and assets, net of liabilities, rather than just\nincomes. <\/p>\n\n\n\n The Forbes list of the world\u2019s richest supposedly covers all types\nof assets: ownership of companies, financial assets, real estate, property, and\nmore. Wealth presumably includes things like art, car or jewelry collections,\njets and yachts, precious metals, and the like, whether or not these are held\nin the country or abroad. And cash, of course \u2013 balikbayan boxes of it.<\/p>\n\n\n\n Estimating the value of wealth is undeniably daunting and will\nrequire a dedicated and incorruptible corps of lawyers, examiners, and experts.\nA decent amount of cooperation with foreign financial authorities is also\nnecessary.<\/p>\n\n\n\n Won\u2019t there just be avoidance and evasion? The country\u2019s rich certainly have a lot of practice obscuring wealth from when they evade paying estate taxes.<\/p>\n\n\n\n But something must be wrong if that difficulty is used to justify\ntaxing the poor instead \u2013 keeping wealth untouchable just because burdening the\npoor is easier is the worst kind of public policy. Imperfect information is\nnever an excuse for inaction. <\/p>\n\n\n\n If administrative, logistical and regulatory costs are high then the wealth tax can be made higher; or it can be made lower and broader, if that will make compliance easier and the revenue take larger. There can also be a mechanism to avoid lack of cash being made an excuse to not pay the wealth tax. This might include, for instance, accepting payments even in non-cash assets.<\/p>\n\n\n\n Choices<\/strong><\/p>\n\n\n\n Implementing a wealth tax also means a host of technical challenges and political obstacles. There\u2019s getting it passed to begin with, which will need to surmount well-paid legal obstacles and well-placed political obstacles. There\u2019s no doubt that the country\u2019s most powerful families and their allies at the highest levels of government will mobilize against this and indeed any legislator supporting this. <\/p>\n\n\n\n The concern will not just be in the run-up to 2022 but to every\nelection afterwards. Anyone even trying to loosen oligarchs\u2019 grips on their\nfortunes will face their very long memories.<\/p>\n\n\n\n The bottom line: complexity and difficulty should not be reasons against a wealth tax. The only real way to overcome these is to just do it \u2013 impose a wealth tax and then keep improving it through actual practice. <\/p>\n\n\n\n This is also the danger in buying too much into the finance\ndepartment\u2019s seemingly compelling arguments for \u2018simpler\u2019 and \u2018more efficient\u2019\ntax systems as if these are ends in themselves. Buying into this narrative\ndangerously allows all sorts of sins like overburdening the poor, preserving\nwealth, and worsening inequality.<\/p>\n\n\n\n Albert Einstein should provide guidance. \u201cIt can scarcely be denied that the supreme goal of all theory is to make the irreducible basic elements as simple and as few as possible without having to surrender the adequate representation of a single datum of experience.\u201d Or as it is neatly and self-referentially paraphrased: \u201cEverything should be made as simple<\/em> as possible, but no simpler<\/em>.\u201d <\/p>\n\n\n\n And the simple truth is that putting a wealth tax in place or avoiding this is a matter of simple political choice. <\/p>","protected":false},"excerpt":{"rendered":" FEATURES<\/p>\n The Philippines has never had a wealth tax. For as long as there has been a tax system in the country, taxes have been collected from what people pay for what they consume or from what they earn.<\/p>","protected":false},"author":13,"featured_media":9697,"comment_status":"open","ping_status":"open","sticky":false,"template":"single-withbanner.php","format":"standard","meta":{"_acf_changed":false,"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":"","_expiration-date-status":"saved","_expiration-date":0,"_expiration-date-type":"","_expiration-date-categories":[],"_expiration-date-options":[]},"categories":[2048,3],"tags":[2218,347,522,521,993,1780,777,2275],"acf":[],"_links":{"self":[{"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/posts\/9693"}],"collection":[{"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/users\/13"}],"replies":[{"embeddable":true,"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/comments?post=9693"}],"version-history":[{"count":8,"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/posts\/9693\/revisions"}],"predecessor-version":[{"id":10326,"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/posts\/9693\/revisions\/10326"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/media\/9697"}],"wp:attachment":[{"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/media?parent=9693"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/categories?post=9693"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/tags?post=9693"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}