Top

Intra Day Investing

  /  Economy   /  Luxury goods tax bill reframed as 25% tax on ‘non-essentials’

Luxury goods tax bill reframed as 25% tax on ‘non-essentials’

DAY DATE 40

THE long-awaited luxury tax measure has been billed as a tax on “non-essentials” like jewelry, high-end bags and watches, luxury cars, private jets, and upscale residential property, with the proposed rate on these items set at 25%.

House Bill No. 6993, filed by Albay Rep. Jose Ma. Clemente S. Salceda, who chairs the House committee on ways and means, proposes to tack on the 25% tax on an item’s wholesale price or import value. The measure was projected to raise P15.50 billion a year.

According to the bill’s explanatory note, the items covered are “beyond the reach of the bulk of consumers, and which are not significant or important inputs to other value-adding industries.”

Non-essential goods, according to the bill, are jewelry, whether real or imitation, perfume and eau de toilette, yachts, and wristwatches, bags, wallets, and belts costing more than P50,000.

Luxury goods also covered in the bill are residential property worth more than P100,000 per square meter, and alcoholic and non-alcoholic beverages selling for more than P20,000 per liter.

Paintings over P1 million, antiques valued at P100,000 and above, and brand new or secondhand automobiles worth at least P1 million will be subject to the tax.

The bill also seeks to tax private planes and parts except those owned by the Philippine government or by airlines and logistics companies.

The bill proposes to amend Section 150 of the National Internal Revenue Code, which authorizes a 5% tax on invasive cosmetic procedures, surgeries and body enhancements.

Analysts last week said that a wealth tax will generate higher revenue than a tax on luxury items. A wealth tax bill is currently pending at the committee level.

“While morally sound, the practical problem with a wealth tax based on net worth is that capital is extremely mobile, and many countries offer ‘tax-haven’ passports to extremely wealthy individuals,” according to the bill’s explanatory note.

The Albay representative also said that the bank secrecy law, especially for foreign currency deposits, will make it difficult to monitor wealth taxes. — Beatriz Marie D. Cruz

Post a Comment