US remittance tax to burden OFWs, families

The proposal to tax outbound remittances of non-United States (US) nationals would slash Philippine inflows by as much as $476.5 million or over P26 billion per year, according to estimates from the Washington-based Center for Global Development (CGD).

- BY BEN ARNOLD DE VERA

In a May 28 blog post, CGD experts Helen Dempster, Charley Ward, and Sam Huckstep said the proposed 3.5-percent tax on remittances under the One Big Beautiful Bill—already passed by the US Lower House—would affect 40 million non-US citizens, as well as their families and friends abroad who receive money sent back home by migrants working or living in America.

"Remittances are a crucial source of household income and economic stability for lowand middle-income countries. Indeed, for many of these countries, the impact of the remittance tax will far outweigh the impact of aid cuts," CGD noted.

"If the new tax raises costs by 3.5 percent, that could lead to a 5.6-percent drop in remittances" from the US, CGD said, citing research that the amount remitted declines by 1.6 percent for every one-percent uptick in transfer costs.