Tax exemption for airlines sought

iloilo Rep. Jerry Treñas believes there’s need to rationalize the taxes, particularly the Commom Carriers Tax (CCT) and the Gross Philippine Billings (GPB) tax that is imposed on international air carriers operating in the country to make the country’s tourism industry globally competitive.
“Our onerous tax regime is driving away tourists from the country.  A tourist lost means lost jobs and revenues for the BIR,” Treñas pointed out as he urged Congress for the passage of HB 4444 which would finally exempt these carriers from CCT which is 3% percent of the airline’s gross turnover and GPB which is 2% of the gross turnover.
The author noted that international air transport connectivity is the most crucial infrastructure linking the country to the global export markets of tourism and international business.
“It enables movement of our network of 8.2 million Overseas Filipino Workers, including those in ship crewing, healthcare, IT, and hospitality industries,” Treñas said.
International airlines are providing seamless travel connections for customers and suppliers of service exporters (e.g. health tourism, retirement, logistics, creative industries, business process outsourcing , high yield backroom operations and regional headquarters) that require direct access and easy entry and exit to and from the Philippines, he explained.
“These are industries being developed and promoted in order to generate much needed investments and foreign exchange.  Clearly, the country is dependent on access provided by international airlines operating to and from the Philippines,” Treñas said.
The author said the exit of international carriers from the Philippine, where foreign carriers are taxed, has been in stark contrast to the growth in services experienced by neighboring Asian nations that either provide incentives or do not tax foreign carriers.
Treñas revealed that carriers with extensive global networks have already left the Philippines, shifting capacity to benefit neighboring countries’ tourism and trade.
“One of the main reasons why the number of airlines operating in the Philippines has decreased is the grossly onerous tax regime for foreign airlines,” he added.
“Without a healthy airline industry, Philippines tourism will never flourish,” Treñas stressed, adding that potential tourists avoid the Philippines due to the lack of non-stop connections from/to the USA and Europe.
Based on 2009 data, international tourists contribute at least US$2.3-billion in export receipts. The lack of non-stop services also negatively impacts airfreight, penalizing existing and potential exporters of electronics, fashion items, seafood and vegetables.
“All the incentives granted under the Tourism Act of 2009 to increase the country’s capacity to generate investments, employments and reduce poverty will simply be rendered worthless. The same is true for all the other government plans to develop export industries and services,” he added.
HB 4444, Treñas emphasized, seeks to advance Philippine tourism, trade, employment and economic integration with the rest of the world, eliminating the negative impact of CCT and GPH on Philippines’ international connectivity and competitiveness as an international investment destination. (30)