Bill to scrap travel tax progresses

By Kenneth Christiane L. Basilio, Reporter

A HOUSE of Representatives committee on Monday approved a proposal to abolish the Philippines’ travel tax that critics say is burdensome and adds costs for Filipino overseas travelers.

The House Committee on Tourism has consolidated six bills seeking to scrap the levy collected from air and sea travelers, a tax imposed under a 1977 presidential decree, despite concerns that its removal could cut funding for agencies that rely on the collections to support services.

A consolidated measure proposing the removal of the travel tax will be endorsed to the House Appropriations and Ways and Means committees to iron out provisions on funding and taxes.

“Why is there a travel tax? It was meant to discourage our countrymen from traveling abroad and to instead support domestic tourism,” Mark T. Lapid, chief operating officer of the Tourism Infrastructure and Enterprise Zone Authority (TIEZA), told lawmakers.

“But it evolved in the years that succeeded… Its purpose became to help all the infrastructure needed for tourism, for our scholars and rehabilitating and improving our heritage sites,” he added.

The government collects a travel tax of P1,620 ($28.35) from economy air passengers and P2,700 ($47.24) from first class air passengers, if they are departing to a foreign country.

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.

The levy was first imposed by Republic Act No. 1478 in 1956 and was later amended through Presidential Decree No. 1183 in 1977.

President Ferdinand R. Marcos, Jr. has declared the bill abolishing the travel tax a priority and had urged Congress to pass it before the adjournment in June.

The government could forgo around P8 billion yearly if such a proposal is signed into law by Mr. Marcos, Finance Secretary Frederick D. Go said last week.

Authorities collected about P8.7 billion in travel tax revenue in 2025, according to a position paper from TIEZA that was submitted to the congressional committee and obtained by BusinessWorld. 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 proceeds from the travel tax collection go to TIEZA, while 40% go to the Commission on Higher Education (CHED) for tourism-related education programs.

The remaining 10% goes to the National Commission for Culture and the Arts.

The three agencies supported the move to scrap travel tax granted their funding would be secured via the annual budget bill.

“To be honest, what goes to TIEZA is only around 35%,” Mr. Lapid said. “That’s because we are in charge of the administrative fee.”

“We’re spending around P500 million to collect our travel tax,” he said.

In its position paper, TIEZA said 90% of its budget relies on the travel tax, and “any disruption without a viable alternative is critical.”

“The travel tax provides the fiscal agility required for immediate tourism response,” it said, noting that its funding source allows the agency to “urgently address” tourism needs.

TIEZA is also pursuing projects to build tourism facilities such as rest areas, master-plan tourist destinations across the country and boost cruise tourism by supporting cruise port terminal development.

IMPACT ON CHED
“The consequences of abolition are disproportionately borne by the education sector,” the CHED said in a position paper, which was obtained by BusinessWorld. “The removal of the travel tax would immediately eliminate a stable and steady source of funding, impacting its ability to sustain current and planned programs.”

CHED Chairperson Shirley Agrupis said the agency’s education development program is funded largely by travel tax revenues, and scrapping the levy could affect 5.4 million students who rely on it.

“If the travel tax is repealed without a replacement revenue source, we will lose 85.6% of its funding,” she told lawmakers.

The House Appropriations Committee will work to “fine-tune” its funding requirements for the agencies that’ll be affected by its scrapping, its chairwoman, Nueva Ecija Rep. Mikaela Angela B. Suansing, told the panel.

“Given the criticality of the funds, we will work to ensure that those funds remain available for the different government institutions involved,” she said. “We’ll work… to structure it in a way that it would be responsive to the different needs of the agencies.”

Scrapping the Philippines’ travel tax would be positive for the tourism industry, Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said.

“It lowers the cost of flying, stimulates outbound and inbound travel, and makes the Philippines more competitive as a regional hub,” he said in a Viber message.

“But it’s not a silver bullet. The real gains come only if the lost revenue is replaced by smarter funding for tourism — better airports, smoother visas, and stronger destination marketing,” he added.