Philippines Eyes Higher Taxes on Wealth and Luxuries to Boost Revenue

The Department of Finance (DOF) is proposing a new comprehensive tax reform package to legislate President Ferdinand Marcos Jr.’s tax relief promises and to offset anticipated revenue losses by raising taxes on vices, single-use plastics, and the introduction of a “wealth tax” targeting luxury vehicles and items, private jets, and other non-essential goods. Under its ProGRESS bill or Promoting Growth, Revenue, and Equity towards Socio-Economic Sustainability, the DOF is estimating to generate P518.71 billion in fresh revenues from its tax reforms from 2027 to 2030 while granting P326.92 billion in tax relief, resulting in a net gain of P191.77 billion. In his fifth State of the Nation Address (SONA), Marcos called on lawmakers to expand the exemption ceiling for personal income tax to those earning P350,000 yearly from the current P250,000. The President also proposed to exempt micro and small businesses from paying the minimum corporate income tax (MCIT), equivalent to 2% of gross income of a corporation for a period of 12 months. Under the ProGRESS bill, the personal income tax-exempt ceiling adjustment would result in the following: Meanwhile, with the proposed minimum corporate income tax exemption, micro (with less than P3 million gross sales) and small (with gross sales between P3 million and P20 million enterprises will no longer be required to pay the MCIT, resulting in a total of P26.60 billion in revenue impact over the next four years. To offset the foregone revenue from the tax cuts, the DOF proposes the following tax measures: Tax on “luxury” items (P15.64 billion additional revenue): A top tax tier of 75% will apply to luxury vehicles worth over P8 million, and private jets will be subject to excise taxes for the first time. —RF, GMA News