DOF threatens to abolish travel tax

MANILA, Philippines — The Department of Finance (DOF) has threatened to abolish the travel tax should the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) fail to mobilize its collections from traveling Filipinos.

During the joint meeting of the Rotary Club of Makati West and Rotary Club of Manila yesterday, Finance Secretary Carlos Dominguez said the government would look into the elimination of the travel tax if it would not be used for its intended purposes.

Dominguez said that TIEZA, the collecting agent for travel taxes, has P14 billion in funds which remain unspent.

“The travel tax is in place and definitely, we will look at its elimination,” Dominguez said.

“I had a meeting with the TIEZA recently and noted that they have P14 billion in their account. I told them if they don’t spend it, I will take it away. I agree that TIEZA has to move faster or the travel tax will be eliminated,” the finance chief said.

Airline passengers departing from the Philippines are levied a travel tax of P1,620 for economy class and P2,700 for first class.

Republic Act 9593 or the Tourism Act of 2009 provides that half of the proceeds from travel tax collection is accrued to TIEZA, while 40 percent goes to the Commission on Higher Education (CHED) and the remaining 10 percent is given to the National Commission for Culture and Arts (NCCA).

TIEZA uses the funds for infrastructure projects, preservation of sites, development of ecotourism sites and administrative expenses.

Meanwhile, Dominguez said the government is also looking into reducing the documentary stamp tax.

“The increase in the DST was not part of the tax reform program. It was inserted during the bicam (bicameral conference committee),” Dominguez said. “We definitely don’t agree with it and we hope that in some future legislation, the DST will be reduced.”

Under the Tax Reform for Acceleration and Inclusion (TRAIN) Act, the stamp tax on documents, instruments, loan agreements and papers, such as bank checks, were doubled to P3 from the previous rate of P1.50. The DST on debt instruments was likewise increased by 50 percent.

The finance chief once again expressed optimism that the remaining packages under the Comprehensive Tax Reform Program (CTRP) will be passed within the year.

In particular, the DOF is hoping for the passage of the Corporate Income Tax and Incentives Rationalization Act by March this year. The bill seeks to lower the corporate income tax rate in the country, while rationalizing fiscal incentives.

Other CTRP measures that are still pending in Congress include Package 3, which seeks reforms in the property valuation system, and Package 4 or the Passive Income and Financial Intermediary Taxation Act, which would rationalize capital income taxation.