By Chloe Mari A. Hufana, Reporter
THE PHILIPPINES is expected to receive $100 million (P5.66 billion) less in remittances next year if US President Donald J. Trump’s “One, Big, Beautiful Bill Act,” which imposes a 3.5% tax on remittances sent by noncitizens, gets congressional nod, according to the presidential palace on Thursday.
The cut is 0.3% of the $36.5 billion that overseas Filipino workers (OFWs) are projected to send to their families back home and 0.003% of economic output in 2026, Palace Press Officer Clarissa A. Castro told a news briefing on Thursday, citing estimates by Department of Finance Chief Economist Domini SD. Velasquez.
“Although 41% of the remittances are routed to the US, not all of these are from Filipinos in the US because remittances are routed to the US via correspondent banks,” she added.
Mr. Trump’s controversial bill, which was approved by the US House of Representatives in May, includes a provision imposing an excise tax of 3.5% on money sent abroad by foreign workers in the US. The US Senate is now deliberating on the measure.
Finance Secretary Ralph G. Recto earlier said the legislation, if passed into law in the US, is “a concern” for the Philippines.
Deutsche Bank earlier noted that North and South America account for only 9.8% of OFWs, while the Middle East accounts for around half or 46% of all OFWs.
The Philippines, a labor-exporting country, relies heavily on remittances from millions of OFWs to support domestic consumption and sustain economic growth. These remittances serve as a lifeline for many households and a buffer for the country’s balance of payments.
Cash remittances from OFWs coursed through banks rose by 4% to $2.66 billion in April from $2.56 billion in the same month a year ago.
In the first four months of 2025, cash remittances went up by 3% to $11.11 billion from $10.78 billion a year ago.
Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc., said the One, Big, Beautiful Bill Act, if passed into law, could reduce Filipino households’ incomes by $100 million, leading to lower consumer spending.
Mr. Erece said the decline in dollar inflows would shrink the country’s foreign reserves, limiting the central bank’s ability to intervene in currency markets, especially as it diverges from the US Federal Reserve’s policy path, potentially causing further peso depreciation.
“Less reserves mean less power for foreign exchange interventions and buffer for trade and foreign payment,” he said in a Viber chat.
“Now that the Bangko Sentral ng Pilipinas deviates its monetary policy path from the Fed, the dollar may continue to appreciate against the peso, and having [fewer] reserves means [fewer] resources to manage exchange rates.”
However, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said $100 million is “relatively negligible” or “minimal,” in the potential effect on the Philippines’ current account, balance of payments, local foreign exchange market, and on the overall economy of the 3.5% proposed tax.
When asked about the bill’s impact on the Philippines’ dollar reserves, Mr. Ricafort said it will be “all the more negligible or minimal.”
