Mau Dizon, a marketing officer in one of the largest Philippine banks, is among millions of taxpayers who stand to benefit from Philippine President Rodrigo Duterte’s tax reform plan that aims to return to consumers 860 billion pesos (US$17 billion) over five years.
Dizon would pay lower taxes under the proposed reform and is likely to spend most of the savings on staples, which account for about a third of her family’s monthly budget.
“The additional income would matter since we have one of the highest taxes and prices are rising,” she said.
Not surprisingly, Philippine retailers have beaten the 23 percent advance in the benchmark stock index, Southeast Asia’s best performer this year.
Metropolitan Bank & Trust Co, the nation’s third-largest money manager, says the rally still has steam because the favorable impact of the tax cuts on disposable incomes would not be short-lived.
“The story for retailers is far from over as the tax cuts are to have a multi-year income effect,” said John Padilla, head of equities investment at Metropolitan Bank, which manages 440 billion pesos in assets. “Consumer companies would gain, particularly those that provide the basics, but retailers are the clear winners from the tax plan.”
Puregold Price Club Inc, a grocery operator, and Robinsons Retail Holdings Inc, which runs supermarkets and drugstores, have risen 39 percent each this year, while Philippine Seven Corp, the largest convenience store operator, is up 24 percent.
SSI Group Inc, a retailer of high-end brands such as Prada and Gucci, has surged 62 percent.
Depending on what lawmakers approve, taxpayers might get between 860 billion pesos and 945 billion pesos from next year through 2022, Philippine Finance Department estimates showed in August.
Not all consumer stocks would gain from the plan, which is expected to be passed by year-end.
Restaurant operators such as Jollibee Foods Corp, Max’s Group Inc, and Shakey’s Pizza Asia Ventures Inc are better bets than food and drinks firms, said April Lee-Tan, head of research at COL Financial Group Inc.
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