A senior lawmaker has warned that removing the value-added tax (VAT) on fuel could do more harm than good to the Philippine economy, even as public pressure grows to ease rising fuel prices.
Miro Quimbo, representative of Marikina’s 2nd District and chair of the House Committee on Ways and Means, said the proposal could weaken the country’s credit standing. According to him, the issue goes beyond lost government revenue.
He explained that a lower credit rating could make it more difficult for the government to manage its debts and could lead to higher borrowing costs. Creditors rely on these ratings to decide how much interest to charge on loans.
Quimbo added that the impact may extend to consumers, as banks could respond by raising interest rates on housing, car, and business loans.
His remarks come after Congress approved a measure allowing the President to suspend or reduce excise taxes on fuel products to help address the ongoing oil price surge.
The Philippines currently holds investment-grade ratings from major global firms. S&P Global Ratings rates the country at BBB+ with a stable outlook, Fitch Ratings at BBB with a stable outlook, and Moody’s Investors Service at Baa2, also with a stable outlook. Meanwhile, Rating and Investment Information has assigned an A- rating, likewise with a stable outlook.
Quimbo stressed that maintaining these ratings is key to keeping borrowing costs manageable for both the government and the public.
