[Ask the Tax Whiz] Should billionaires pay more?

The proposal for a wealth tax in the Philippines aims to impose annual rates on net taxable assets above certain thresholds, but effective tax administration is crucial for its success. Current revenue collection heavily relies on voluntary compliance, highlighting the need for a modern tax administration that can accurately identify and verify wealth. Before implementing a wealth tax, the government must distinguish between legitimate and ill-gotten wealth, ensuring that tax policies do not hinder productive investment. This is AI-generated. Read the article for full context. Report any errors. Should billionaires pay more? Yes. But before Congress creates another tax, government must answer a more basic question: Can it identify the real billionaires, determine what they actually own, and verify whether that wealth was legitimately earned and properly taxed? House Bill No. 9274 proposes annual rates of 1% on net taxable assets above ₱1 billion, 2% above ₱2 billion, and 3% above ₱3 billion. Greater progressivity is a defensible objective. But a wealth tax without modern tax administration risks becoming a classic Philippine reform: good policy on paper, weak enforcement in practice. The most revealing number is not the proposed 3% rate. It is 97.55%. According to the Bureau of Internal Revenue (BIR)’s 2025 Annual Report, ₱3.03 trillion—or 97.55% of total collections—came from voluntary payments. Preliminary and final assessments contributed only 2.33%, while delinquent accounts added 0.12%. That does not make audit unimportant. Tax audit and investigation deter tax evasion and protect compliant taxpayers. But it tells policymakers where sustainable revenue really comes from: voluntary compliance supported by credible enforcement. The Organisation for Economic Co-operation and Development (OECD) similarly reports that additional assessments from audit averaged about 3% of collections among reporting tax administrations in 2023. Modern tax administrations do not finance government by auditing everyone. They use information, risk management, and targeted enforcement to encourage everyone else to comply voluntarily. Modern tax administration should therefore be the reform—not simply another tax. The Philippines can learn from countries that have retained wealth taxes. Switzerland integrates wealth taxation with annual income-tax reporting and established asset-valuation systems. Norway imposes combined wealth-tax rates around 1% at higher levels and provides valuation discounts for shares and operating assets. Colombia, a more relevant emerging-market example, made its wealth tax permanent, with rates from 0.5% to 1.5%. Lessons and tax reforms The lesson is not that we should copy them. Wealth taxes work best when government can see, value and verify wealth. That is precisely where our institutional reform must begin. The Philippines needs a modern revenue administration that is fiscally autonomous, professionally managed and politically insulated, with strong internal controls and accountability. It should integrate tax returns, beneficial ownership, property, securities, major asset acquisitions and legally accessible financial information to build verified asset-and-income profiles of high-net-worth taxpayers. Forbes is useful for headlines. It is not a tax database. Bank secrecy must also evolve. It should protect legitimate privacy—not unexplained wealth, tax evasion, money laundering or corruption. Reform must come with strict access rules, digital audit trails, confidentiality safeguards, and severe penalties for abuse. (READ: [Puso at Diwa] Foreign currency deposit secrecy: Time for a constitutional rethink) Objective risk-based scrutiny should follow the evidence wherever it leads—including to public officials, politically exposed persons, political families, major campaign donors, and government contractors when declared lawful income is materially inconsistent with accumulated assets. That is not political persecution. The best protection against weaponized taxation is an independent institution applying transparent rules and due process regardless of who is in power. Our decades-long struggle to recover ill-gotten wealth should have taught us another lesson: once assets disappear behind nominees, corporations and layered transactions, recovery becomes far more difficult. Government should detect unexplained wealth early—not decades later. But tax policy must distinguish legitimate wealth from ill-gotten wealth. An entrepreneur who builds a multibillion-peso company, creates thousands of jobs, attracts investment and pays the correct taxes is not the problem. Developing economies need successful businesses, deeper capital markets, and more investment. Tax policy should distribute the fiscal burden more fairly—not destroy the productive wealth that creates jobs. That is why Congress should carefully model a recurring tax as high as 3% of net wealth. Start with a genuinely ultra-high threshold. Consider moderate marginal rates. Provide tightly designed rules for productive but illiquid assets. Close artificial-debt and beneficial-ownership loopholes. Then measure actual collections, investment effects and administrative costs. The World Bank likewise emphasizes transparency, beneficial-ownership information, international information exchange, and advanced data analytics as foundations of stronger domestic revenue mobilization, especially in developing economies. So, should billionaires pay more? Yes. But first build a government capable of finding the real billionaires—and distinguishing wealth created through enterprise from wealth accumulated through corruption or tax evasion. Collect better before taxing more. Tax verified wealth, not headlines. Modernize tax administration. Protect legitimate investment. Follow unexplained wealth wherever it leads. Otherwise, we may create another tax that looks progressive on paper—while the truly rich and powerful remain beyond its reach. – Rappler.com Mon Abrea, CPA, MBA, MPA (Harvard) is a global tax policy expert and Chief Tax Advisor of Asian Consulting Group (ACGlobal). He advises governments, multinational enterprises, and international organizations on tax policy, investment competitiveness, and fiscal reform. He is the author of Reimagining the World Without Corruption and Why Invest in the Philippines? CREATE MORE Edition, and has represented the Philippines in policy dialogues at the OECD, World Bank, and other international forums. Below are some related columns of Mon Abrea you may have missed: