'The last of the Mohicans'

KLM Royal Dutch Airlines, the last remaining major airline operating in the country, may be forced to pull out due to discriminatory tax policies imposed by the Philippine government against foreign carriers. When that happens, it will be a final blow that will put the final nail in the coffin for the tourist industry. First, there was the hostage crisis then the travel advisories and the latest tourism slogan involving the plagiarized logo from Poland. The Philippines could become virtually isolated from Europe since KLM is perhaps “the last of the Mohicans” being the only remaining European carrier flying non-stop from Manila to Europe.

KLM has been talking, more like pleading, with government officials to be sensible and consider the removal of the 5.5-percent tax which is broken down into the three percent Common Carrier Tax (CCT) on gross receipts which is imposed solely on foreign carriers, and the 2.5-percent Gross Philippine Billings Tax (GPBT) applied to all air transportation originating from the Philippines in an uninterrupted flight whether or not the tickets were sold in the country. This means that even air tickets and airway bills for cargo that are sold outside the Philippines are subject to CCT and GPBT which amounts to “double taxation” since the European carrier already pays taxes in their home country.

Since taxes are levied from the Philippines to the first point of destination outside the country, the European carrier has been the hardest hit by this tax scheme since it operates non-stop from Manila to the Netherlands. As a matter of fact, the Philippines is the only country that charges these taxes – and even Tourism officials have admitted that such a policy is a major hindrance to local tourist and business travel since it makes other countries like Thailand and Malaysia more attractive to foreign carriers.

The imposition of such taxes is also considered a violation of the non-discrimination principle of the World trade Organization which stipulates that a member-state should not discriminate between its own and foreign products and services. Likewise, the CCT and GPBT violate the International Civil Aviation Organization or ICAO resolution regarding the waiver of taxation on international air transportation to which the Philippines is also a signatory. Definitely, removing the CCT and GPBT would therefore level the playing field and could even increase tourist arrivals and generate economic benefits by as much as $78 million according to a report by the Air Transport Association.

The only way out of this situation is through legislation but we all know that’s such a long and tedious process and may just be too late. The German airline Lufthansa left in 2008 almost for the same reason. KLM – which is celebrating its 60th anniversary in the country next year – might just be forced to close shop and do a “Dutch treat” leaving the Philippines to go on its own and pay its way out of this predicament.

Philippines on the Top Five

The Philippines has the dubious distinction of being in the Top 5 list of countries with the biggest volume of methamphetamine seizures after China, the United States, Thailand and Taiwan according to the 2009 World Drug Report of the UN Office on Drugs and Crime. According to the same UNODC report, the Philippines is a major source of shabu that is used either domestically or exported to countries in Southeast Asia, with local variants of the substance manufactured mostly by foreign chemists in industrial-sized laboratories run by transnational organized crime rings.  While marijuana remains to be the most abused drug in the country, the Philippine Drug Enforcement Agency and other law enforcement agencies are also worried about the increasing use of Ecstasy (methylenedioxy methamphetamine or MDMA) among young people frequenting bars or nightclubs in Metro Manila and other urban areas. What’s even more disturbing is the disclosure that majority of multi-drug users are just high school graduates.

Our friend Mike Toledo who was a resource speaker at the Asian Federation of Therapeutic Communities conference held at the Marriott Hotel in Newport City talked of media’s role in heightening public awareness about the evils of drug abuse. The fight against the growing drug menace in the country is something that should not just be left in the hands of anti-narcotics and law enforcement agencies alone since there is growing evidence of drug use even among schoolchildren. Efforts by the DepEd, PDEA and the Dangerous Drugs Board in conducting orientation and training seminars to teachers, principals, guidance counselors and other school personnel should and must be supported.

Diplomatic round up

 –– Makati Business Club member and former CEO of Philam life Joey Cuisia has been nominated as the Ambassador to Washington. Joey, who was the former Central Bank Governor during the Cory administration, was a diehard Aquino supporter during the last elections.

–– After three years in the Philippines, Thai ambassador Kulkumut Singhara Na Ayudhaya or Ambassador Hoy to close friends is soon leaving for his new post as Thailand’s Ambassador to Spain. The Thai ambassador speaks fluent Spanish having finished his master’s degree in international relations from the University of Madrid. All his Spanish friends in Madrid are all ready to welcome him... “Hoy llega!”

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