By Robert B. Roque, Jr.
If there’s one in the Cabinet retained after Marcos Junior’s bold call for his top alter-egos to resign en masse, it would probably be Finance Secretary Ralph Recto. And here’s why: the President trusts him to steer the country’s economy toward so-called inclusive growth.
But if Recto wants the public’s trust in return, he’d do well to tread carefully, especially when it comes to policies that set fire to ordinary Filipinos’ already struggling finances.
The capital gains tax is one of those levies you don’t think about until it burns. It hits when someone sells a piece of land, a house, or any real asset that’s not part of their business. And earlier this year, it was set to hit much harder when Recto proposed jacking it up from 6% to a whopping 10%.
Recto’s proposal came out of nowhere as if shot from the hip and hitting millions of Filipino property owners on the head like a dumbbell. Why so?
Well, more often than not, that “gain” comes when a parent dies and leaves behind a family home. Amid grief and funeral costs, families are hit with yet another blow — a tax for simply inheriting what’s rightfully theirs.
Recto’s proposal was neatly stacked under a draft law called the GROWTH bill — lumping capital gains, donor’s, and estate taxes all into one punishing hike from 2025 to 2030. The government said it could rake in P300 billion from this. But at whose expense?
At first, the finance chief had the gall to say it “won’t affect the masses” because it’s not a consumption tax. What he didn’t say, though, is that the Filipino middle class, if not the millions working hard for a modest home, are the dead target.
Naturally, outrage was so much so that by the end of April, Recto backpedaled. He had to write Congress to say the proposal was off the table. But the damage was done — and this, I think, might have helped scorch the chances of many administration allies in the midterm polls. Napaso ang taumbayan, eh!
There’s already too much pain from inflation, too much wear and tear on Juan dela Cruz’s wallet under this Marcos Junior administration to be springing surprise taxes like this.
CREBA — the Chamber of Real Estate and Builders’ Associations — wasn’t having it either. Their take? The capital gains tax hike would have triggered:
Higher land and housing prices – CGT is a pass-on tax. More cost to sellers = higher price tags for buyers.
A bigger housing backlog – Developers will steer clear of low- to middle-income housing markets.
Economic tremors – Real estate props up 85 industries. Choke one, and the rest struggle to breathe.
Investor scare – Higher tax burdens scare away both local and foreign investments.
More expensive goods – Even brave developers will pass their higher costs to consumers.
Costlier infrastructure – Land for roads, bridges, and trains? Now pricier — at taxpayers’ expense.
Recto may have retreated — this time. But the people must keep watch. Because if there’s one thing this finance secretary is good at, it’s pushing taxes like they’re candy.
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