MANILA - The passage of President Rodrigo Duterte's tax reform package in the House of Representatives will help boost revenue, addressing the country's "key weakness," debt-watcher Fitch Ratings said Wednesday.
The Philippines' general government revenue is equivalent to 22 percent of gross domestic product in 2016, compared to a median 30 percent for countries similarly rated at BBB or investment grade, Fitch said.
"It also demonstrates the administration's commitment to broader tax reforms that have the potential to improve fiscal stability and support an ambitious public investment program," Fitch said in a statement.
Without tax reform, Fitch said it would be difficult for Duterte to raise infrastructure spending to 7.4 percent of GDP by 2022 and keep the budget deficit within the 3 percent of GDP target.
The debt watcher also expressed concern that the bill might be watered down when it is tackled in the Senate.
The House bill seeks higher duties on fuel, cars and sweetened beverages to offset a reduction in personal income taxes. The finance department said it could raise up to P1.16 trillion over 5 years.