In a recent Palace briefing, Communications Secretary Claire Castro, echoing Department of Economy, Planning, and Development Secretary Arsenio Balisacan, described a wealth tax as an “economist’s dream” while simultaneously cautioning that it might trigger capital flight.

The argument that taxing the ultra-rich will cause them to pack their bags and their billions is the standard bogeyman hauled out to discourage progressive taxation and maintain the status quo. But the reality is that capital is not waiting for a wealth tax to “flee,” as it is already leaking out of the country through offshore accounts.

For decades, the Philippines’ wealthiest families have utilized offshore accounts and tax secrecy jurisdictions to move funds out of the reach of domestic authorities. According to reports by Global Financial Integrity, the Philippines loses billions of dollars annually to illicit financial flows, much of it through trade misinvoicing and offshore transfers.

The  Palace fears that a wealth tax will drive money abroad but fails to mention the fact that our elites have already been sending money abroad for many years. In 2021, the Pandora Papers exposed how some of the Philippines’ most prominent billionaire families and political figures held massive assets in offshore tax havens. Rather than accommodating this irresponsible and illegal behavior, we should have mechanisms to tax wealth wherever it sits.

This is where the UN Tax Convention comes in. Currently being negotiated following a historic vote at the United Nations, this framework aims to create a globally inclusive system for tax cooperation. For decades, global tax rules were set by the OECD, a club of rich countries, which often overlooked the needs of developing nations.

The UN Tax Convention shifts this power to the UN, ensuring that all countries have a seat at the table. Its primary goal is to end tax abuse and offshore evasion by establishing international standards for transparency and the automatic exchange of information. It essentially plugs the holes in the global financial system, making it significantly harder for billionaires to hide wealth in low-tax jurisdictions.

A wealth tax is not just an economist’s dream. It is a fiscal necessity. The Philippine government is currently grappling with a record-high public debt that has surged past P15 trillion. The burden of repayment of public debt falls on the shoulders of taxpayers, largely through regressive consumption taxes that put more burdens on workers, women, and low income families.

Debt service is taking away much needed resources for public services and climate action.  A more equitable and just recovery lies in pursuing the cancellation of unsustainable and illegitimate debt and implementing  dedicated tax on the ultra-wealthy. IBON estimates the total wealth tax from the country’s 3,000 billionaires at least Php502 billion annually, including Php259.4 billion from the country’s reported 50 richest Filipinos. 

A wealth tax generating P502 billion can fully bankroll the Philippines’ national health budget or the Universal Health Care (UHC) or resolve the classroom shortage, support public investment in renewable energy and grid modernization, or subsidize electricity rates for low-income households and food logistics at this time of spiraling fuel prices.

While the 2026 budget allocates a record P448 billion to health, it still fails to meet the legal mandate to subsidize premiums for 24.5 million poor Filipinos. To reach its 2028 targets, the UHC requires an estimated P400 billion in dedicated annual funding, which is a gap a wealth tax would not just bridge, but close entirely.

The classroom shortage is a massive gap in the Department of Education’s budget. Currently, the Philippines faces a staggering shortage of 165,443 classrooms, which, at the current P24 billion annual budget, may take 20 years to fix.

We need public investment in the acceleration of the development of renewable energy and grid modernization to reduce the Philippines’ dependence on fossil fuels, an imported harmful energy source, and its vulnerability to fossil fuel price volatility. The impacts of fossil fuel dependence is being dramatically emphasized in the wake of impacts of rising prices of gas and oil as a consequence of the current conflicts in the Middle East.

Economists warn that if oil hits $200 per barrel, inflation will soar to 8.6%, requiring a massive infusion of cash to prevent a total economic slowdown. Instead of borrowing more and adding to the P15 trillion debt, the government can also choose to use revenues from the wealth tax to subsidize electricity rates and food logistics for a certain period, and reduce the debilitating impacts of inflation for the bottom 50% of the population.

Malacañang said the wealth tax proposal is under consideration, citing the President’s stance that “nothing is off the table.” If that is true, then the government must stop treating the super-rich as a fragile class that must be coddled. Wealth concentration in the Philippines is among the most extreme in the world. When a handful of families control wealth equivalent to a significant chunk of the national GDP while the majority of Filipinos struggle with inflation, the harm is not in taxing the rich, but in failing to do so.

With the UN Tax Convention closing the exits, the Palace’s excuse of capital flight is running out of road. It is time to stop dreaming of a wealth tax and start implementing one. – Rappler.com

Lidy Nacpil is the coordinator of the Asian Peoples’ Movement on Debt and Development or APMDD.