Philippine Sen. Ralph Recto cautioned the government to go slow on a proposal to tax the income of Overseas Filipino workers (OFWs). Senator Recto said OFW remittances are deemed "export receipts" and, by current policy, are outside the ambit of taxation.

Mr. Recto expressed fears that if the proposal advanced by academics from De La Salle University to tax the remittances of workers abroad would become state policy, OFWs might send money home through informal channels.

"Remittances would go underground, or follow any scheme outside formal banking channels," Senator Recto said.

Last year, about 12 million Filipinos abroad sent home $12.7 billion, a record that is on track of being surpassed this year, given the 19 percent jump, year-on-year, on the value of remittances in the first two months of this year.

"One of the incentives of remittances is the guarantee that it won't be taxed.  If we are giving incentives for capital from abroad, then why should we not extend the same to income from abroad?" he asked.

The De La Salle proposal "would dampen the repatriation of OFW income," he stressed.

Mr. Recto said the government's medium-term expenditure program does not factor in the need for new taxes, only better tax administration.

"In fact, the government is looking at a bigger budget space, and, in its projections, does not hint at the need to tax OFWs," he said. (Story is lifted from a press release issued by the Office of Senator Recto.) # # #