Europe-PH News

Foreign Chambers Urge Abolition of Aviation Taxes

March 23, 2011

European Chamber of Commerce of the Philippines

The Joint Foreign Chambers (JFC) has called on government to remove excessive taxes on the aviation industry. 

A joint statement by the seven foreign chambers tagged the common carriers tax and the gross Philippine billings tax as barriers to full development of the country's tourism industry as they also deter new investments in the airline sector.

The groups also said these taxes go against international practices.

"(These taxes) should be removed as soon as possible to unleash the creativity and dynamism of the private sector.  Continuation of these taxes risks losing some of the present international air services into the country as well as deterring new ones and departs from standard international practice," the JFC said.

The JFC, however, lauded the Aquino administration for issuing last October Executive Order 29 or the pocket open skies policy, which they said would represent giant reforms in the aviation industry if coupled with the removal of these taxes.

With these proactive reforms of the Aquino administration, we can look forward to continued rapid expansion of the aviation market in the Philippines, more competitive pricing and better service and new routes to drive tourism investment and employment, the JFC said.

The Philippines charges a 2.5 percent gross Philippine billings tax and a 3 percent common carrier's tax on all revenues, passengers, excess baggage and cargoes of all international carriers regardless of the point of sale or payment of the ticket, passage or freight documents.

The JFC also welcomed the government's implementation of measures to make the local tourism industry attractive, such as giving priority to improving airport facilities and other infrastructure at secondary gateways in expectation of increased tourist arrivals.

Agencies such as the Department of Transportation and Communication, Department of Tourism, Department of Public Works and Highways, Department of Education, and the Technical Education and Skills Development Authority are also coordinating their programs to develop the needed facilities, training and promotion at priority tourist destinations.

Meanwhile, hotels, restaurants, shops, and farms to support the growth in tourist arrivals, will also require new investment, creating additional business opportunities for local businesses at these destinations, the JFC said.

It said EO 29 allows market forces to determine supply and demand of airline seats to secondary gateways throughout the country.

"With this new policy, the administration has taken a giant step towards its goal of doubling annual tourist arrivals to more than six million by 2016," the JFC said.

It is estimated that every foreign tourist who visits the Philippines infuses an average of $1,000 creating one direct or indirect job for a Filipino in the tourism service industry.  Many of these jobs are in rural areas and less developed provinces.

"With the landmark policy established by EO 29, more foreign airlines -- as well as local airlines can be expected to begin direct air services from cities around Asia to cities throughout the Philippines," the group said.

The JFC comprises the American Chamber of Commerce of the Philippines Inc., Australia-New Zealand Chamber of Commerce (Philippines) Inc., Canadian Chamber of Commerce of the Philippines Inc., European Chamber of Commerce of the Philippines, Japanese Chamber of Commerce and Industry of the Philippines Inc., Korean Chamber of Commerce of the Philippines Inc., and the Philippine Association of Multinational Companies Regional Headquarters Inc.


Source: Malaya, Business, 23 March 2011

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