Acknowledges families will feel the pinch
Malacañang on Thursday downplayed the likely economic impact of a proposed 3.5 percent US tax on remittances, saying it would have a “minimal” effect on the Philippine economy.
However, officials acknowledged the burden could be more deeply felt by Filipino households that rely heavily on money sent home by relatives in the United States.
Palace Press Officer Claire Castro cited a Department of Finance (DOF) report indicating that the proposed levy — currently pending in the US Senate — would apply to non-US citizens, green card holders and individuals on working visas.
Out of an estimated 4.4 million Overseas Filipinos in the US, only about 20 percent would be affected, Castro said, adding that the projected impact on gross domestic product (GDP) would be a marginal decline of just 0.003 percent in 2026.
Although 41 percent of remittances pass through the US financial system, the DOF noted that not all of these come directly from Filipino workers in the US, as many global remittances are routed through US-based correspondent banks.
As a result, the actual amount affected could be as low as $100 million out of the projected $36.5 billion in total Philippine remittances in 2026.
“For every $100 remitted, only $3.50 would be withheld as tax, meaning families in the Philippines would receive $96.50,” Castro explained.
Still, the Palace acknowledged the potential hardship for families who solely depend on remittances. “Based on Bangko Sentral ng Pilipinas (BSP) surveys, around 90 percent of remittance inflows are spent on food and essential household needs,” Castro said.
The proposed tax, which forms part of a broader US legislative initiative to raise revenue for domestic priorities, would take effect starting Jan. 1, 2026, if passed.
