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Tuesday, February 08, 2005
Higher value-added tax on luxury items eyed
MANILA -- Bad news for those who love luxury items. Senator Ralph Recto, chairman of the Senate ways and means committee, said he is considering an increase in value-added tax (VAT) imposed on luxury items like jewelry, yachts, private jets, watches, perfumes, radio-controlled toys, and others.
A labor group, meanwhile, has asked the Senate to identify basic commodities and services that will be exempt from the expanded VAT.
Recto said if the government is increasing VAT on menthol candies, it should also consider increasing tax on expensive toys.
The committee continues hearing the VAT bill Tuesday, this time on the imposition of higher VAT on luxury items.
"If this government is brave enough in asking the poor and the middle class to pay a higher tax on processed food, rent and other essentials, then it should not fear increasing the tax on non-essential items affluent families accumulate," he said.
Recto said a P50 million-Lear jet of a rich family should be taxed more than the P500-electric fan of a poor family.
"If we are going to ask the poor to pay more tax on things they can't live without, then we must demonstrate to them our will to impose a higher tax on goods the rich can live without," the senator said.
At present, not all expensive watches are taxed, he said.
In addition, the senator said there is a need to review the VAT-free status of expensive and imported food such as Norwegian salmon and Kobe beef.
"What we have here is the hilarious situation of a P5 pack of instant noodles being covered by VAT while an Alaskan King Crab, which costs P1,000 a kilo, is
VAT-free," he said.
Also on Monday, the Trade Union Congress of the Philippines (TUCP) urged the Senate to come up with the list of essential commodities and services that could be exempted from an increase in VAT.
Trade union spokesman Alex Aguilar said imposing additional duties on basic goods and services would only burden minimum wage earners "so it is imperative that prime commodities and services be exempted from the VAT increase".
Instead of imposing VAT on essential goods and services, Aguilar said the additional VAT should be imposed on sectors that could afford it.
"The VAT should be higher on foods and services offered in high-class hotels and restaurants. A higher VAT should also be imposed on high-end cellular phones and other luxury items but not on school supplies, books and other instructional materials," added Aguilar.
Aguilar also said professionals like doctors, actors and actresses who earn a lot should be the ones to pay a higher VAT since they have the money to pay for it.
"It is immoral to subject the poor to taxation while those earning far greater incomes are granted such exemptions," he said.
As they acknowledge the government's move to sustain the country's growth by imposing an additional VAT, Aguilar said, "it is our position that revenue enhancement by increasing the VAT by two percent should be done selectively and not across the board." (JPM/MSN)
(February 8, 2005 issue)
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