By Kenneth Christiane L. Basilio, A reporter
HOUSE OF REPRESENTATIVES A committee on Monday approved a proposal to end the Philippines’ travel tax that critics say is burdensome and adds costs Filipinos do not travel abroad.
The House Tourism Committee has put together six bills that seek to eliminate the air and cruise passenger tax, which was imposed under a 1977 presidential decree, despite concerns that its removal could reduce funding for companies that rely on the collection to support services.
A joint measure proposing the removal of the travel tax will be recommended to the House Appropriations and Ways and Means committees to rule out provisions on funding and taxes.
“Why is there a tourism tax? It was meant to discourage our people from traveling abroad and instead support local tourism,” Mark T. Lapid, a senior executive atfTourism Infrastructure and Enterprise Zone Authority (TIEZA), he told the law enforcement.
“But it came out of the successful years… Its purpose was to help all the necessary infrastructure for tourism, our academics and to renovate and improve our heritage sites,” he added.
The government collects a travel tax of P1,620 ($28.35) for passengers on economy flights and P2,700 ($47.24) for passengers on first-class flights, when departing from another country.
Exempted from the travel tax are overseas Filipino workers, overseas Filipino permanent residents who have stayed less than one year in the Philippines, and children two years old and below.
This penalty was first introduced by Republic Act No. 1478 in 1956 and later amended by Presidential Proclamation No. 1183 in 1977.
President Ferdinand R. Marcos, Jr. declared a bill repealing the travel tax a top priority and urged Congress to pass it before the June adjournment.
The government would give up about P8 billion a year if such a proposal is signed by Mr. Marcos into law, said Finance Secretary Frederick D. Go last week.
Authorities collected an estimated P8.7 billion in travel tax by 2025, according to a position report from TIEZA sent to a congressional committee and received BusinessWorld. The collections reached P7.8 billion in 2024, P6.3 billion in 2023, P332 million in 2021, P713 million in 2020, and P7.1 billion in 2019.
Under the law, 50% of the revenue from the travel tax collection goes to TIEZA, while 40% goes to the Commission on Higher Education (CHED) for tourism-related education programs.
The remaining 10% goes to the National Commission for Culture and Arts.
The three agencies supporting the travel tax repeal initiative have their funding available through the annual budget bill.
“To be honest, what goes to TIEZA is about 35%,” said Mr. Lapid. “That is because we are in charge of the administration fee.”
“We spend approximately R500 million to collect our travel tax,” he said.
In its paper, TIEZA said that 90% of its budget depends on the travel tax, and “any interruption other than one that works is important.”
“The travel tax provides the financial means needed to respond quickly to tourism,” he said, noting that its source of funds allows the agency to “respond quickly” to tourism needs.
TIEZA also pursues projects to build tourism areas such as resorts, large-scale tourist areas throughout the country and to develop cruise tourism by supporting the development of cruise ports.
IMPACT ON CHED
“The consequences of termination are disproportionately borne by the education sector,” CHED said in a position paper, which was discovered by BusinessWorld. “The removal of the travel tax will immediately destroy a stable and stable source of funding, affecting its ability to support current and planned programs.”
The Chairman of CHED, Shirley Agrupis, said that the education development program of this institution is largely funded by the travel tax money, and the cancellation of the tax may affect the 5.4 million students who depend on it.
“If the travel tax is spent without a source of revenue, we will lose 85.6% of its revenue,” he told the lawmakers.
The House Appropriations Committee will work to “adjust” its funding needs for organizations that will be affected by its repeal, its chairman, Nueva Ecija Rep. Mikaela Angela B. Suansing, told the panel.
“Due to the financial crisis, we will work to ensure that those funds are always available in the government institutions involved,” he said. “We will work… to rescue you in a way that will meet the needs of different agencies.”
The abolition of the Philippine travel tax would be good for the tourism industry, said Jonathan L. Ravelas, senior consultant at Reyes Tacandong & Co.
“It lowers the cost of air travel, boosts outbound and inbound travel, and makes the Philippines competitive as a regional hub,” he said in a Viber message.
“But it’s not a silver bullet. The real benefits will only come if the lost revenue is replaced by smart tourism subsidies – better airports, smoother visas, and stronger des.”tination marketing,” he added.
