Finance Secretary Benjamin Diokno flatly rejected the suggestion of a youth representative at the House of Representatives for the imposition of higher tax rates on the country’s billionaires as a form of wealth redistribution.
At the initial hearing of the Committee on Appropriations on the proposed 2024 government budget late Thursday, Congressman Raoul Danniel Manual, a representative of the Kabataan party list, sought Diokno’s view on the imposition of a so-called billionaires’ tax, a measure that would impose extra levy on the income of ultrarich Filipinos.
Manuel said that with only a thousand or so billionaires in the country, collecting the higher taxes from them should be easy and yield a large amount of revenue for the government.
“Wouldn’t a billionaires’ tax be a form of redistributing income? Because when we compute our gross national income, we use the mean…Are we not open to that?” the lawmaker said.
Diokno, a former central bank governor and a professor emeritus at the University of the Philippines’ School of Economic, said taxing the superrich isn’t progressive and may even be counterproductive.
“In terms of taxation, we prefer to tax what you consume from society rather than your income. Your income is what you contribute to society—you are paid higher because your contribution is high,” said Diokno, who as finance chief is tasked to raise revenue for the government.
“Consumption is what you take away from society. So, somebody who doesn’t earn anything but consumes a lot, he should be taxed (more). If you tax high-income salary, you discourage work initiative. In fact, that is a trend: You rely more on consumption tax rather than income tax,” the finance secretary said.
Diokno also doubts imposing higher tax rates on billionaires would yield more revenue.
“I don’t think that is a progressive measure, when you tax billionaires. Iilan lang sila at pampapogi lang yon. (There is only a few of them and such tax measure is just meant to earn political brownie points,” said the finance chief. “But the tax shield from a billionaires’ tax is much less than a general consumption tax.”
In January, aid group Oxfam issued a report that called for taxing the superrich to redistribute wealth as it noted that over the last decade billionaires around the world have doubled their wealth, when the richest one percent gained 74 times more than the bottom 50 percent.
In the House of Representatives, Congressman Joey Salceda has filed a bill to tax luxury and non-essential items owned by wealthy Filipinos. Meantime, Senator Sherwin Gatchalian has said he is considering imposing higher taxes on the superrich but noted the complexity of implementing such a measure.
