Philippines Says Bond Tax Issue Won’t Affect Demand for Its Debt

The Philippines’ decision to impose a 20 percent tax on interest earnings on 35 billion pesos worth of bonds that fell due this month won’t affect demand for the nation’s debt, President Benigno Aquino’s spokesman Edwin Lacierda said in a briefing today in Manila.

“All Treasury issuances are subject to tax; they are fully aware of that,” Lacierda said. The issue is “already with the courts and we will let the courts decide,” he said. Fourteen of the nation’s business groups of banks, fund managers and traders asked the government, in a paid newspaper advertisement today, to honor the tax exemption promised when the bonds were sold in 2001. That exemption was “the exception rather than the rule,” Lacierda said.

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To contact the editor responsible for this story: Clarissa Batino at cbatino@bloomberg.net