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Manila Bulletin devider Philippines devider National devider Quimbo: Philippine credit rating could take a hit from fuel VAT removal

Quimbo: Philippine credit rating could take a hit from fuel VAT removal

Published Apr 10, 2026 03:19 pm

At A Glance

  • Marikina City 2nd district Rep. Miro Quimbo has expressed reservations on the proposed scrapping of value-added tax (VAT) on fuel amid the House of Representatives' efforts to come up with a legislative response to the persisting fuel price crisis.
(Unsplash)
(Unsplash)


Marikina City 2nd district Rep. Miro Quimbo has expressed reservations on the proposed scrapping of value-added tax (VAT) on fuel amid the House of Representatives' efforts to come up with a legislative response to the persisting fuel price crisis.
Quimbo, an economist, is mainly worried about the impact of such move on the Philippines' credit rating.
Credit ratings are crucial for developing countries because they directly affect access to international financing, borrowing costs, and investor confidence. A strong rating lowers interest rates and attracts investment, while a weak rating raises borrowing costs and can trigger economic instability.
“Ang epekto niyan (fuel VAT removal), hindi lang ang kawalan ng government revenue but more significant na hindi nakikita ng marami nakakaapekto sa credit rating natin (The effect of that is not only the loss of government revenue, but more significantly and something many do not see is it impacts our credit rating),” said Quimbo, chairman of the House Committee on Ways and Means.
“Kapag ang ating credit rating ay mababa ang number one na nakakaapekto is your ability to repay (When our credit rating is low, the number one factor affected is your ability to repay)," he noted.
Quimbo--presiding officer of the 13-committee Legislative Energy Action Development (LEAD) Council--is concerned of the possibility that banks might impose higher interest rates on housing loans, car loans, and other personal or business loans.
The LEAD Council held its first hearing at the House of Representatives last Wednesday, April 8. The marathon hearing was attended by the economic managers of the Marcos administration.
During the hearing, Department of Finance (DOF) Undersecretary Karlo Fermin Adriano said the government could forego P210 billion in revenues if the excise tax and VAT on fuel products were to be suspended for the rest of the year.
"If we include like a VAT suspension on top of the suspension of excise tax, if we suspend VAT on petroleum products, it would be around P210 billion for eight months,” Adriano told the energy crisis council.
According to Adriano, diesel prices could be reducec by P6.70 per liter and gasoline prices by P11 per liter if the excise tax and VAT are suspended.
Local pump prices of fuel have practically doubled the past month because of the spillover tensions in the Middle East caused by the United States-Israel-Iran conflict.

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