DoF open to imposing direct tax on Philippines’ richest

By Justine Irish D. Tabile, Senior Reporter

THE DEPARTMENT of Finance (DoF) is open to proposals to impose a direct tax on wealthy individuals, as long as the measure can be effectively implemented.

Asked about a wealth tax last week, DoF Undersecretary Karlo Fermin S. Adriano told reporters: “Yes, that’s why we’re doing stakeholder engagement to get inputs. If they can think of any other wealth tax that we can consider, why not?”

Mr. Adriano said any wealth tax proposal should be “implementable.”

“So, we’re open, that’s why we’re doing all this stakeholder engagement to get all comments, and to be able to consider all the options. And our main classification is it’s implementable,” he added.

The DoF so far conducted two stakeholder briefings on its proposed tax reform package under the Promoting Growth, Revenue, and Equity towards Socio-economic Sustainability (ProGRESS) bill. A third briefing is scheduled for mid-October in Baguio City.

The package includes tax relief measures such as raising the annual income tax exemption threshold to P350,000 and removing the minimum corporate income tax for micro and small businesses.

It also includes raising the excise tax on sugary drinks, and proposing a uniform excise taxes on e-cigarettes and novel tobacco products and an excise tax on single-use plastics.

The ProGRESS bill also seeks to update taxes on luxury goods, including automobiles, nonessential goods and private aircraft.

Under the proposal, vehicles with a net manufacturer’s or importer’s price exceeding P8 million would be subject to a 75% excise tax.

The excise tax on nonessential goods would rise to 25% from 20% of dutiable value, while its coverage would be expanded to include private aircraft, recreational vessels such as jet skis, speedboats, sailboats and motorboats, and other high-end goods.

However, some groups want the government to go further and impose a direct tax on wealth.

Trade Union Congress of the Philippines-Associated Labor Unions Advocacy Officer Mark Christian B. Villena said during a stakeholder briefing that the proposal to raise taxes on luxury goods were “not enough.”

“From what we can see there should be a wealth tax,” Mr. Villena said, noting that the group has been pushing for the passage of House Bill No. 8860 or the Patas na Ambag sa Tax para sa Angat-Sahod (PATAS) Act.

The bill seeks to impose a progressive solidarity wealth tax on individuals with a net worth of at least P1 billion.

It proposes a 1% tax on net worth of P1 billion to P2 billion, 2% on over P2 billion to P3 billion, and 3% on over P3 billion.

Jose Enrique “Sonny” A. Africa, executive director of IBON Foundation, said the think tank’s latest estimate showed that the proposed wealth tax could generate at least P570 billion in revenues.

Asian Consulting Group Founding Chairman and Chief Tax Adviser Raymond “Mon” A. Abrea said billionaires “should pay their fair share,” but warned that new taxes should be backed by clear estimates of their revenue and economic impact.

“Luxury taxes target spending; wealth taxes target accumulated assets. Before introducing either, the government should publish credible revenue estimates, enforcement costs, and effects on investment — including businesses whose value is substantial but whose cash is limited,” he told BusinessWorld in a Viber message.

However, he said such measures would only be as progressive “as its ability to reach hidden wealth.”

“Before we even impose tax on the wealthy or wealth taxes, why don’t we collect first or audit first the unexplained wealth? Because we might end up collecting more from those who are already paying,” he said.

“Tax fairness means reaching concealed fortunes as effectively as salaries deducted at source. Collect better before taxing more — and protect the legitimate investment that creates jobs,” he added.

PROTECT THE MIDDLE CLASS
Meanwhile, the Asian Development Bank Institute (ADBI) said the Philippines will have to protect the purchasing power of its middle class and strengthen investment to revive economic growth.

ADBI Dean and Chief Executive Officer Bambang Brodjonegoro said slowing household consumption has weighed on Philippine growth as the broader Asian economy grapples with weaker productivity and external uncertainties.

“This engine of growth is basically private consumption. And when we talk about private consumption, if I do the comparison among the ASEAN (Association of Southeast Asian Nations) economies, I think both Thailand and the Philippines are experiencing a slowdown, deeper than Indonesia and Malaysia,” he told reporters on Thursday.

He said weaker purchasing power, partly due to inflation, could be prompting middle-income households to cut spending, weighing on consumption and overall economic growth.

“I think for the Philippines to revive economic growth, maybe the attention needs to be on how to increase the purchasing power of the middle class. And don’t let the middle class shrink,” he added.

The Philippine economy grew by just 2.3% in the April-to-June period, bringing first-half growth to 2.6%, well below the government’s 3.5%-4.5% target for the year.

Household final consumption expenditure increased by 2.8% in the second quarter, much slower than the 5.2% growth in the same period a year ago, extending a five-quarter deceleration in consumption growth that began in the second quarter of 2025.

Mr. Brodjonegoro said the Philippines could consider temporary and targeted subsidies or social assistance for households just below the middle-income segment to help support consumption in the short term.

However, he said measures to support consumption would only help prevent growth from slowing further, while faster and more sustainable growth would require stronger investment.

“If you rely on consumption, it will at least maintain the existing growth. But if you focus more on investment, you will have higher economic growth,” he said.

Mr. Brodjonegoro said the Philippines should also revitalize its manufacturing sector and identify segments of regional and global manufacturing supply chains where it can build a competitive advantage.

“You don’t have to come up with a certain product, but more importantly, the Philippines has to be in the regional or global value chain,” he said.

He pointed to opportunities linked to digital transformation and artificial intelligence, including semiconductors, data centers and renewable energy supporting data-center operations.