GROWTH: Raise taxes but don’t disrupt financial goals

The Government Revenues Optimization through Wealth Tax Harmonization (GROWTH) bill proposed by the Department of Finance — a measure that seeks to increase estate tax, donor’s tax, and capital gains tax from six percent to 10 percent — is causing quite a stir.

One of the most vocal in voicing out concern over the measure is the Management Association of the Philippines (MAP), warning that the proposed bill penalizes responsible financial planning and discourages the accumulation of generational wealth. The group has sent a letter to President Marcos, seeking a moratorium on new tax increases until a comprehensive audit on government expenditures is conducted, alongside substantial reduction in the state’s expenses.

While the government’s intent to raise revenue is understandable, the bill risks deepening economic inequality if it fails to balance its fiscal goals with a sustainable approach to wealth-building and transparent governance.

Proponents of the bill view the rise in taxes as a means to bolster the government’s coffers and finance vital public services. In theory, higher taxes on estates, donations, and capital gains would help the government address pressing fiscal deficits, support social programs, and invest in infrastructure. However, these aims come with significant unintended consequences, particularly for responsible financial planners and families hoping to pass on wealth across generations.

Generational wealth-building is a cornerstone of many societies’ economic systems. In the Philippines, as in many other nations, families often rely on strategic financial planning, including trusts, savings, and long-term investments, to safeguard their legacies and ensure that wealth is passed onto future generations. The proposed tax hikes could undermine these efforts, potentially leaving heirs with less financial security, and by extension, contributing to wider wealth disparities.

For families with substantial assets or small businesses, the increase in estate and donor’s taxes could erode the wealth that has been carefully accumulated over generations. What’s worse, the new tax brackets might force families to liquidate properties or businesses just to pay the taxes, undermining long-term stability in favor of short-term gains for the government. Instead of providing a safety net, the tax hikes could inadvertently disrupt the financial strategies that have supported Filipino families for decades.

The MAP’s argument, that the proposed tax changes effectively penalize responsible financial planning, should not be taken for granted. For many, the accumulation of wealth is about ensuring that future generations have the resources to thrive. But instead of fostering an environment in which financial security is nurtured, the government is effectively discouraging the very behavior that enables wealth creation in the first place.

Moreover, there is the question of transparency. If the government is to justify these increases in taxes, it must ensure that the additional revenue is spent wisely and efficiently. The Filipino taxpayer, especially those impacted by these tax hikes, deserves transparency in how their contributions are used. Let us not forget that the 2025 national budget remains a question to many Filipinos. If taxes are collected but wasted or mismanaged, the public will likely view this proposed measure as another unfair burden, further widening the gap between the rich and the poor.

The proposal may have noble intentions, but the GROWTH bill as it stands risks reinforcing the very economic inequalities it seeks to address. The solution lies not in raising taxes indiscriminately but in creating an environment that encourages responsible financial behavior and in ensuring transparency in how taxpayers’ money is spent. The bottomline is not just about raising revenue; it’s about raising the hopes of every Filipino.

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Credit belongs to: www.mb.com.ph