Wealth Tax Proposed to Achieve Recto’s P4.3 Trillion Tax Collection Goal

The IBON Foundation, an economic think tank, has reiterated the need for a wealth tax to meet the ambitious P4.3 trillion tax collection target set by newly appointed Finance Secretary Ralph Recto. This call for a wealth tax aligns with Recto’s prioritization of boosting state coffers through tax collections.

IBON executive director Sonny Africa expressed concerns that the burden of tax collection targets might fall disproportionately on the poor and middle classes. He pointed out that while the government could benefit from intensified campaigns against tax evaders and improved tax collection methods, achieving this target without overhauling the tax system would be challenging.

Africa criticized the current tax system for decreasing taxes on large companies and wealthy families, transferring the burden onto ordinary Filipinos. He highlighted taxes on items like plastic bags, digital services, Motor Vehicle User’s Charge, sweetened beverages, and alcohol, which predominantly affect the middle class. The IBON executive director advocated for taxing the country’s wealthiest 1% instead.

According to IBON’s estimates, the government could collect half a billion pesos annually from nearly 3,000 Filipino billionaires with a cumulative wealth of P8.1 trillion. They propose a wealth tax of 1% for wealth over P1 billion, 2% over P2 billion, and 3% over P3 billion, which could raise approximately P467.1 billion.

The previous administration had rejected proposals for taxes on the wealthiest individuals, citing concerns about scaring away investors and encouraging tax avoidance schemes. Former Finance Secretary Benjamin Diokno had expressed doubts about the passage of such measures by Congress.

IBON’s proposal aims to redistribute the tax burden, suggesting that increasing taxes on the wealthy could ease the taxes paid by the poor.