Rising inequality has been an inescapable phenomenon of global economic development over the past 200 years. On the other end, the profits of business enterprises and their owners’ wealth have been increasing disproportionately. This has been highlighted in a landmark 2014 study by a group of French economists led by Thomas Pikkety. The global data confirms this analysis of unabated inequality amid high growth rates, leading to an ever-widening gap between the rich and the poor.
In declaring the reduction of inequality as one of its Sustainable Development Goals (SDGs), the United Nations (UN) observes that growing inequality affects 70 percent of the global population. It is threatening “long-term social and economic development, [harming] poverty reduction and [destroying] people’s sense of fulfilment and self-worth.” All these, “in turn, can breed crime, disease, and environmental degradation” (UN 2020).
As a core response to inequality, proposals for a wealth tax on a country’s richest citizens have been proposed. A wealth tax is a levy imposed on an individual’s net worth (i.e., all the forms that a person’s wealth can take). More than anything else, it is a social justice measure. As the situation has been aggravated by the three year COVID-19 pandemic, previously resistant institutions such as the International Monetary Fund (IMF) and World Bank (WB), have been forced to consider a wealth tax as both an emergency response to inequality and a measure to cover the costs of containing the pandemic.
Asia has one of the world’s highest rates of inequality. The Philippines, whose inequality rates remain the highest in the region, has seen proposals for a wealth tax gaining momentum among civil society organizations (CSOs), labor unions, popular organizations, the academe, and the media. It even became a contentious issue in the May 2022 national elections. Resistance from both the government and corporate sectors, however, has been intense and unbending—unmindful of a shift in perspective from global and regional players. Furthermore, the number of countries who have imposed wealth taxes has been increasing, with support for the measure among international players growing as well.
How the campaign for a Philippine wealth tax will play out in the coming months and years depends on the ability of its proponents to mount a credible and sustained effort to galvanize popular support.