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Salceda eyes at least P12.4 bn from “Louis Vuitton Tax;” House tax chair eyes earmarking revenues to support local creative industry

January 19th, 2023

House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) says that the House’s tax panel is eying at least P12.4 billion in annual revenues from the proposed expansion of the non-essential goods tax, which Salceda is pushing for.

“I’m looking at a short list of additional items in this Louis Vuitton Tax. Basically, the aim is to find some way to tax the rich consistent with the constitutional principle of progressivity in taxation. For now, my short list will generate P12.4 billion at least.”

In Salceda’s proposed list are luxury watches, luxury cars above P5 million in price, private jets, residential property above P100 million per unit, beverages above P20,000 per bottle, and leather goods above P50,000 per unit.

Salceda says he is targeting “non-essential goods whose prices are beyond the reach of the bulk of consumers, and which are not significant or important inputs to other value-adding industries.”

Salceda explained that “The non-essentials goods tax will be on top of all other taxes. The tax on luxury cars, for example, will be on top of the automotive excise tax, which is arguably a pollution and congestion tax but not yet a luxury tax. The tax on luxury residential properties will be on top of VAT and other taxes on its sale.”

“Other items, such as sales of shares in exclusive membership clubs (Manila Polo Club, Tagaytay Highlands, etc), jacuzzis, furs, all regatta equipment, and antiques are also being considered, but the revenue potential could be limited, and enforcement costs could outweigh revenue potential,” Salceda added.

Salceda says that increasing the non-essentials goods tax rate to 25% or 30% on top of expanding the list will generate between P15.5 to P18.6 billion in annual additional revenues.

Boost local creatives sector

Salceda explained that he is also studying how the additional revenues can be “funneled into the country’s creative sectors, particularly our own creators of luxury items. I think it’s time the Philippines becomes more than just a part of the whole assembly of luxury goods.”

Salceda says he is looking at the possibility of power cost or labor cost subsidies for companies who can fully design and manufacture luxury bags and other ‘creative products’ in the country.

“I am also looking at infusing the Creative Industry Development Fund with revenues from this new revenue stream,” Salceda added.

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