House passes tax on luxury items

Luxury products and services, including liposuction, planes, yachts, video cameras and even cellular phones, will soon cost more.

The House ways and means committee endorsed yesterday the imposition of a 20-percent excise tax and a 10-percent value-added tax (VAT) on products and services that Filipinos with disposable income buy or partake of.

Tarlac Rep. Jesli Lapus, committee chairman, said the luxury levies would be borne mostly by those with greater spending capacity who should share a bigger part of the tax burden.

He said the House would try to expedite the approval of the luxury tax measure so there would be one more source of additional revenues for the cash-strapped treasury.

The Lapus committee consolidated two bills authored by Representatives Abraham Mitra of Palawan and Catalino Figueroa of Western Samar.

Mitra’s measure seeks to expand the list of non-essential goods and services covered by the excise tax and VAT to include antiques and cosmetic and body enhancement procedures such as liposuction.

Mitra said if poor Filipinos are made to pay a VAT on cheap canned meat such as corned beef, the rich should be made to pay taxes on liposuction, breast enhancement and other kinds of cosmetic surgery that can cost as much as P150,000 or even more.

"These are services that only the well-to-do can afford," he noted.

He said subjecting non-essential goods and services to taxes would expand the tax base "without detriment to the needy sectors of society."

Mitra’s bill would also empower the Department of Finance to periodically review the list of non-essentials so the government can "effectively respond to the rapid evolution of issues, nuances and lifestyle in society."

Figueroa’s proposal contains a longer list of luxury products that would be subject to excise tax and VAT.

Aside from planes, cameras, yachts, and mobile phones, the listing includes gold, silver or platinum watches and jewelry, perfume, carpets, bath tubs, color television sets, microwave ovens, compact discs and laser discs, pianos and electric organs, digital tape recorders, slot machines, pinball machines, golf clubs and similar recreational equipment.

Soft drinks and fruit juices were originally on the Figueroa list but the ways and means committee scrapped them due to strong lobbying by congressmen from sugar-producing provinces.

"We had to remove these items from the list or this bill would face rough sailing," Lapus said.

He said the congressmen from sugar-producing areas feared that if soft drinks and fruit juices were included under the excise and value-added tax, demand for these products, and consequently for sugar, would go down.

The Philippine Sugar Millers Association and the Beverage Industry Association of the Philippines had expressed strong opposition to the proposed soft drinks and juice taxes in position papers submitted to the Lapus committee.

The panel also approved the proposed two-year extension of the Special Purpose Asset Vehicle Law, which gives several tax incentives to banks and financial institutions to dispose of their non-performing assets.

Lapus said banks had successfully unloaded P50 billion of their idle assets, estimated to be worth P520 billion, during the two-year coverage of the law, which lapses this month.

In a related development, party-list representatives from labor groups pressed the House yesterday for the passage of a bill seeking to grant workers a P125 increase in their daily wage.

Rep. Crispin Beltran of Anakpawis said the P125 increase, "though insufficient, will partially restore the lost purchasing power in real value of the workers’ wages over the last decade."

"More so, it will increase the minimum wage to more than half of the daily cost of living and substantially improve the quality of life of the more than 16 million workers in the private sector and their families," he said.

Outside the gates of the Batasan compound in Quezon City, workers had encamped to dramatize their support for their representatives’ plea for the approval of their wage adjustment proposal.

Since the enactment of the law delegating wage fixing to regional wage boards, lawmakers have not intervened on issues relating to wages.