Manila: Albay 3rd District Rep. Raymond Adrian Salceda has introduced a legislative proposal aimed at abolishing the estate tax in the Philippines, suggesting that the taxation of inherited properties be shifted to the point of sale through the capital gains tax system.

According to Philippines News Agency, Salceda filed Bill No. 6553 at the House of Representatives, where it is expected to be reviewed by the Committee on Ways and Means. The bill proposes that families should not be burdened with taxes upon the death of a relative, a move that Salceda argues is more reflective of current wealth structures.

Salceda highlighted that the current estate tax system disproportionately affects ordinary Filipino families who lack the means to restructure their assets, while wealthier individuals often avoid these obligations through corporate structures. He emphasized that the revenue generated from estate taxes is minimal compared to the economic harm it causes, estimating a delayed estate transfer impact of PHP78 billion due to idle lands and unresolved paperwork.

Under the new proposal, heirs would be exempt from paying estate taxes. Instead, inherited properties would incur a deferred charge only upon sale, at which point they would be subject to the capital gains tax. Salceda described this approach as simpler and more humane, as it aligns the tax obligation with the actual sale of the property.

Furthermore, the bill seeks to streamline legal and administrative processes by eliminating the requirement for an Estate Tax Clearance Certificate (E-CAR) for estate transfers. Instead, an extrajudicial settlement of estates would be sufficient until the property is sold, at which point the E-CAR would be necessary.

Salceda expressed confidence that the reform would be revenue-neutral and could potentially enhance tax collections over time by improving compliance and bringing more properties into the formal market.