The Philippines Want to Introduce a Tax to Support a Tourism Development Fund

Philippines, air tax, tourist tax

According to Philippines newspaper Philstar, the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) is eyeing to replace the PHP1,620 travel tax (US$30.50) charged to Filipinos flying abroad with a PHP500 (US$9.40) fee for all, including foreign tourists.

“What we want to do right now is revisit that (travel tax) and make a tourist development fund specifically for departure,” TIEZA chief operating officer Pocholo Paragas said over the weekend to the PhilStar.

Under Presidential Decree 1183, passengers who are leaving the country irrespective of the place where the air ticket is issued and the form or place of payment are required to pay a travel tax of PHP 1,620 (US$30.50) for economy class and PHP 2,700 (US$51) for first class.

Paragas said he wants to replace the PHP 1,620 with a PHP 500 (US$9.40) fee that will go to the Tourist Development Fund (TDF).

Last year, Paragas said TIEZA was eyeing to create a TDF to be used for the improvement and development of infrastructure for tourists visiting the country.

He added that charging PHP500 will also lessen the burden on Filipinos currently paying the P1,620 travel tax.

While a law is required to establish the TDF, Paragas said he would prefer an executive order first to push for this concept.

“What we wanted to do, prior to law is if there is an EO that can help us set up this frame of mind, it will work,” Paragas said.

In December, Paragas said he already submitted a copy of a draft bill for the creation of the fund to President Duterte.

Paragas said they are still updating the draft and coordinating with international partners.

“We’ve been dealing with the international segment, the international airlines, (other) countries; we’re trying to coordinate with them to finalize the best fit for the Philippines,” he said.

Meanwhile, Paragas said under the proposed TDF, he is requesting that the allocation for the Commission on Higher Education (CHED) and the National Commission for Culture and Arts (NCCA) from the travel tax be scrapped to give TIEZA more funds.

Under the current travel tax law, TIEZA is in charge of collecting the fees, but only receives 50 percent of the collection, while CHED gets 40 percent and NCCA receives 10 percent.

Paragas said CHED gets a big budget annually but did not elaborate on NCCA’s case.

Asked how soon the TDF could be established, Paragas said the pending passage of Tax Reform for Acceleration and Inclusion Package 2 is hindering the agency from doing so since it involves a lot of sectors in terms of incentives.

“I really want to push for it, but what is derailing us is the TRAIN 2,” Paragas said.

Under TRAIN 2, at least 120 special laws on investment incentives will be amended or repealed while lower corporate income tax rates will be imposed.

Paragas earlier said he targets to establish the TDF by the end of the Duterte administration in 2022.

The TIEZA, tourism infrastructure arm of the Department of Tourism, is mandated to develop, manage and supervise tourism infrastructure projects in the country.

(Source: the PhilStar)