Marikina City 2nd District Representative Miro Quimbo, chair of the House Committee on Ways and Means, cautioned Tuesday that proposals to scrap the value-added tax (VAT) on petroleum products could trigger deeper economic consequences than expected.
Quimbo explained that the impact would extend beyond reduced government revenues, warning that the country’s credit rating could be placed at risk.
“Ang epekto niyan, hindi lang ang kawalan ng government revenue but more significant na hindi nakikita ng marami nakakaapekto sa credit rating natin,” he said.
He stressed that credit ratings are crucial in determining whether creditors adjust interest rates on government debt. A downgrade, Quimbo noted, could ripple across the economy, affecting loans such as housing and car financing.
“Kapag ang ating credit rating ay mababa ang number one na nakakaapekto is your ability to repay… tataasan naming ang interest rate. Mas malubha ang epekto yun kasi pati ang mga bangko magtataas ang interest rate… sa housing loans, car loans, lahat yun so sala-salabat down the roa,” he added.
Currently, the president has the authority to suspend or reduce excise taxes on petroleum products. However, several bills in the House are seeking to remove VAT as well, amid sustained increases in global oil prices.