Examining the Impact of the PIFITA Bill

Renato Reside, Ma. Lourdes Lacson and Fernando Aldaba
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Renato Reside: University of the Philippines School of Economics
Ma. Lourdes Lacson: ACERD

No 202406, Department of Economics, Ateneo de Manila University, Working Paper Series from Department of Economics, Ateneo de Manila University

Abstract: The Passive Income and Financial Intermediary Taxation Act (PIFITA) has been passed by the Philippine Congress to the Senate and is currently awaiting ratification. However, there currently are no estimates of the impact of passage of the bill into law on the Philippine economy. This paper attempts to do this by gauging its impact on investment through the changes in the user cost of capital. The results of regression analysis confirms that a reduction of various taxes on passive income lowers the user cost of capital, which stimulates investment.

Keywords: Philippines; taxation; investment; financial intermediation; user cost of capital (search for similar items in EconPapers)
JEL-codes: E22 G2 H20 K34 O16 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2024-03
New Economics Papers: this item is included in nep-pbe and nep-sea
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