A tax incidence analysis on overseas Filipino workers’ remittances
Date
2025-05-30
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Abstract
Although there is a growing interest in remittance taxation, there is currently limited empirical literature that addresses concerns regarding the economic burden of a remittance tax. This paper aims to bridge this research gap and analyze who will pay for a possible remittance tax in the Philippines. This paper utilizes theory of tax incidence, utility maximization, and New Economics of Labor Migration to analyze incidence of remittance tax. Using household-level data from the merged 2023 dataset of Family Income and Expenditure Survey and Labor Force Survey (FIES-LFS) collected by the PSA, the paper estimates a two-stage Heckman model of household remittance behavior and use this to evaluate the impact of remittance tax on OFWs and their households. The results show that there is likely a differential impact of remittance tax on various household types.
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Keywords
Remittance, Incidence, Taxation, Heckman Model, New Economics of Labor Migration