Taxing foreign tourists: Sound idea or too risky?
The more attractive the Philippines becomes to foreign tourists, the more our communities need to build additional tourism facilities or improve existing ones.
One way that other countries have dealt with similar challenges was to charge foreign tourist taxes, also known as accommodation taxes or sojourn taxes. This practice is common in Europe.
In Southeast Asia, Malaysia adopted the practice in September 2017, charging 10 ringgit (about P119.60) per hotel room per night. Malaysia’s projected collection is around RM200 million (P2.4 billion) per year, tax specialist Lianne Carmeli Fronteras wrote in a paper published by the National Tax Research Journal in its JulyAugust 2017 issue.
The idea of foreign tourist taxes, however, has several challenges. First, as Fronteras pointed out, is the “administrative difficulty” of targeting only certain individuals, like those traveling for leisure or vacations, and not those who are arriving for treatment, pilgrimage, and official or business trips. Second, the rate must be enough to raise substantial revenue, but not so high that it would dampen interest in visiting the Philippines.
Here’s a look at the relevant numbers.
“Although environmental policy has improved, it still remained low (118th place out of 136), risking to undermine natural resources, which is the main asset for attracting tourists in the country.”