Duty free sales reserved for tourism thrust

REPORT FROM BUSINESSWORLD PRESIDENT Gloria M. Arroyo has issued a directive that would enable duty free shops’ net profits to be used exclusively for tourism programs. Executive Order (EO) No. 680, signed by the President on November 19 last year, removes the requirement for duty free shops to remit 1.5% of their net sales to the national government by amending EO No. 140, issued on November 30, 1993. Under Sec. 4 of EO 140, Duty Free Philippines (DFP) had been remitting to the national government an amount equivalent to 1.5% of its net sales. But Ms. Arroyo said such remittance "is an additional burden" to DFP. "Amending EO 140 series of 1993 by deleting Section 4 thereof would relieve DFP of its additional burden as the remittance to DoT [Department of Tourism] is tantamount to a remittance to the national government as well" the President said in her order. In 1986, President Corazon C. Aquino issued EO 46, granting the Ministry of Tourism (now DoT) — through the Philippine Tourism Authority — the power to establish and operate a duty and tax free merchandising system in the country. The order also mandated that all net profits from merchandising operations accrue to the Ministry of Tourism. Tourism Sec. Joseph Ace H. Durano said the order would ensure that his agency would have more funds for programs designed to enhance efforts to compete with neighboring countries. "The EO makes it official that Duty Free Philippines contribution to Department of Tourism promotions is equivalent to [contributing to the] national government," he explained. "Duty Free Philippines has authority now to use its net income for DoT promotions only." The Tourism chief noted that Duty Free had contributed about P500 million per year for DoT promotions in the past three years, after remitting 1.5% to the national government under EO 140. The Budget department’s Web site show that the DoT got a P1.547-billion outlay last year, but was not one of the items with highest budgetary allocations. Those the biggest shares were the Education department (P128.6 billion); Public Works and Highways (P71.2 billion); National Defense (P54.3 billion); Interior and Local Government (P51.3 billion); state colleges and universities (P17.3 billion); Agriculture (P17.3 billion); Transportation and Communications (P16.9 billion); and Health (P11.5 billion). — Alexis Douglas B. Romero/BusinessWorld