Travel tax abolition bill hurdles House committee

A HOUSE of Representatives committee approved on Monday a measure to abolish the travel tax, citing the need to relieve the burden on travelers.

The House Ways and Means Committee approved an unnumbered substitute bill consolidating six measures seeking to remove the travel tax, a decades-old levy imposed under a Presidential Decree that had been designed to curb overseas travel at a time when the Philippines was seeking to conserve foreign exchange and promote domestic tourism.

The substitute bill will now head to the House Appropriations Committee, which will evaluate the measure’s funding provisions before being discussed on the House floor.

“We cannot allow our system of collecting funds for the government’s important programs to become regressive,” Marikina Rep. Miro S. Quimbo, who heads the House Ways and Means Committee, told the panel. “Our tax system must remain progressive.”

The proposal to cut the travel tax, which collects P1,620 from economy class air passengers and P2,7000 from first class passengers flying overseas, was designated a priority bill by President Ferdinand R. Marcos, Jr.

The levy was first imposed by Republic Act No. 1478 in 1956 and later amended through Presidential Decree No. 1183 in 1977. Exempt from travel tax are overseas Filipino workers, Filipino permanent residents overseas who stayed less than a year in the Philippines, and children aged two years and below.

Legislators have overwhelmingly backed moves to scrap the travel tax, saying the levy has outlived its purpose and now hampers travel for Filipinos, despite concerns from government agencies that rely on it as a steady source of funding.

“For flights scheduled on or after the date of effectivity, the collection authority shall immediately refund any previously paid travel taxes to the passenger,” according to the unnumbered substitute bill, a copy of which was obtained by BusinessWorld.

Under the current law, 50% of the proceeds from the travel tax collection go to the Tourism Infrastructure and Enterprise Zone Authority, with 40% earmarked for the Commission on Higher Education for tourism-related education programs. The National Commission for Culture and the Arts takes up the remaining 10%.

“The survival of these programs should not be dependent on the number of travelers or the amount of taxes that we collect from them,” Mr. Quimbo said. “They are far too important to be dependent on unpredictable numbers.”

The bill proposes that government agencies affected by the tax cut and whose projects may be jeopardized be funded through the national budget “to ensure the continuity of programs and projects previously funded by travel tax collections.” — Kenneth Christiane L. Basilio