Federation of Philippine Industries chairwoman Beth Lee on Thursday urged caution in implementing tax reforms endorsed by the Organisation for Economic Co-operation and Development, saying changes must be sequenced to avoid undermining demand and competitiveness.
Lee said the OECD proposals reflect global trends toward strengthening fiscal sustainability but stressed that reforms should be calibrated to protect consumption and investment.
On proposals to rationalize value-added tax exemptions, Lee warned that while broadening the tax base could boost revenues, removing relief for seniors, schools and hospitals may raise costs in socially sensitive sectors.
“Any abrupt changes could ripple through households and, at the margins, labor markets, affecting employment and service access. Safeguards are essential, and we must be sensitive to the effects of these changes,” Lee said.
On fiscal incentives, Lee said tying benefits directly to actual investment activity is sound policy. However, she noted that investors benchmark across borders, with Southeast Asian peers continuing to roll out aggressive fiscal packages.
“Moving away from tax holidays, if and when it is implemented, must be carefully sequenced and regionally benchmarked to ensure reforms strengthen—rather than erode—the country’s investment appeal,” she said.
Lee added that the success of fiscal reforms will depend on the timing and order of implementation to preserve demand, sustain investor confidence and support industrial expansion.
She said incentive reforms must be paired with broader competitiveness measures, including lower logistics and power costs, improved infrastructure and productivity upgrades.
