TIEZA wants travel tax replaced with charge on foreign tourists

THE Tourism Infrastructure and Enterprise Zone Authority (TIEZA) is proposing the removal of the travel tax, a move which is expected to encourage more travel.

“That’s the plan. We have submitted the proposal to the President,” TIEZA General Manager and COO Pocholo J.D. Paragas told reporters on the sidelines of a TIEZA event.

Mr. Paragas said they directly submitted the proposal “a couple of months ago” to President Rodrigo R. Duterte, seeking an executive order abolishing the tax. A bill proposing the same is also in the House of Representatives.

Airline passengers leaving the Philippines are charged a full travel tax of P1,620 for those in economy class, and P2,700 for those in first class. Overseas Filipino workers and Filipino permanent residents abroad are among those who are exempt from paying the tax.

Under Republic Act No. 9593 or the Tourism Act of 2009, 50% of travel tax collections go to TIEZA, some 40% is allotted to the Commission on Higher Education for tourism-related educational programs, and the remainder will be given to the National Commission for Culture and the Arts.

To answer the need for funds for infrastructure development, TIEZA proposes the creation of a tourism development fund, similar to what is being collected in other countries, which will come from a fee added in the airfares of incoming foreign tourists.

“It will be used to make their next trip better,” Mr. Paragas said. He added that the fee will be adjusted based on funding needs.

Mr. Paragas said that he is “not positive” that the request will be granted anytime soon, but said he sees the possibility of the removal of the tax before the end of the term of Mr. Duterte.

In the meantime, TIEZA hopes to include the travel tax in online bookings, including bookings done through third-party websites or travel platforms.

“Our target is literally by the end of next year, 90% is all online. Right now we have Cebu Pacific. We’re also doing it for PAL (Philippine Airlines). We’re doing it also with other foreign, international airlines. In addition to that, even (travel booking service) Trivago,” Mr. Paragas said.

TIEZA last week partnered with Cebu Pacific, a unit of Cebu Air, Inc., to include the travel tax in tickets booked through the airline’s website and mobile application.

The possible removal of the travel tax is expected to boost tourism, as well as the airline industry.

Philippines AirAsia, Inc. has been proposing to the government the removal of the travel tax as well as airport fees for a period of five years, as the budget carrier says it can stimulate outbound tourism.

Cebu Pacific Vice-President for Corporate Affairs JR Mantaring told reporters on the sidelines of the TIEZA event, “If there’s a plan by TIEZA to remove travel tax, we support that… If travel tax is removed, more passengers will be encouraged to travel because that’s P1,620 less to pay for.”

A spokesperson for Philippine Airlines said the airline cannot comment until it has more information on the matter. —