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Friday, March 29, 2024

Think tank asks Congress to call off luxury taxes

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A think tank group on Thursday appealed to Congress  to reconsider the imposition of luxury taxes on a broader selection of goods and services, saying it will have negative effects on the of economic sectors such as tourism, services, and urban development.

Former congressman and InfraWatch PH convenor Teddy Ridon made the appeal following a suggestion by Albay Rep. Joey Sarte Salceda to tax instead luxury the items of the rich as proposed by Oxfam Pilipinas.

“The original call of various groups has been to impose taxes on the country’s richest Filipinos, through a wealth tax similar to a White House proposal imposing taxes on unrealized income arising from gains in various securities, Ridon said.

“There was never a call to impose taxes on luxury goods and services. And to be clear, these two proposals have entirely different objectives and implementation mechanisms,” he added.

Ridon also said that luxury taxes will impinge on the country’s general tourism strategy as an international tourism destination.

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“The tourism sector is a pillar of Philippine economic growth, aside from the semiconductor and BPO sectors. Shopping for luxury, mass affluent and even high street goods and services is part of the overall strategy to attract foreigners to visit the country.”

Ridon said that even vacationing OFWs opt to shop locally for apparel and housewares instead of buying the same items abroad.

“With a luxury tax on a wider swath of consumer goods and services, foreign tourists would probably skip the PH as a destination, if our regional competitors can offer cheaper prices for luxury, mass affluent and high street goods.”

“Conversely, this would compel affluent Filipinos to shop for the same goods and services elsewhere in the world. Instead of spending cash in Filipino stores, they would now opt to spend their money in other international hubs. Affluent Filipinos will most probably do this, because they can.”

Ridon said affluent Filipinos might opt to buy their bags in Paris, their watches in Geneva if it makes more economic sense to fly to Europe and buy luxuries than buying at home.

“The same is true in taxing expensive real estate. Affluent Filipinos will now have to decide whether an apartment in New York, London or Paris makes more sense than spending it on real estate at home, as market prices will now be artificially inflated by luxury taxation.”

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