House panel OKs bill abolishing travel tax

The House Committee on Tourism has approved the bill abolishing the travel tax, provided it includes a provision for clear and sustainable funding for government programs that currently rely on the fund. 

This happened after the panel headed by Romblon Representative Eleandro Jesus Madrona approved the six measures seeking to abolish the travel tax, which currently amounts to P2,700 for first-class passengers and P1,620 for economy travelers.

House Majority Leader and Ilocos Norte First District Representative Sandro Marcos is one of the measure's authors.

Madrona directed the Committee Secretariat to prepare the committee report so it can be immediately referred to the House Committees on Ways and Means and Appropriations to address the funding provision.

“Travel tax collections amount to roughly P8 billion annually and dropped to zero during the pandemic. In short, the revenue stream is volatile. And if we continue expanding exemptions—for example, exempting all economy passengers—practically nothing will be left to collect,” Madrona said.

“It may be better to establish a new funding scheme rather than continue relying on the travel tax,” he added.

House Committee on Appropriations chairperson and Nueva Ecija Second District Representative Mikaela Angela “Mika” Suansing, in response, assured stakeholders that funding protections would be promptly addressed.

“Given the criticality of the funds, we will work together to ensure those funds remain available. We hear you, and we understand the current structure,” Suansing said.

“We will craft a mechanism responsive to the needs of the different government agencies,” she added.

Proceeds of travel tax currently go to the Tourism Infrastructure and Enterprise Zone Authority (TIEZA), the Commission on Higher Education (CHED), and the National Commission for Culture and the Arts (NCCA).

TIEZA Chief Operating Officer Mark Lapid told lawmakers that approximately 96% of travel tax-paying passengers are economy class travelers and that around 90% of TIEZA’s operating budget comes from travel tax revenues.

Lapid also said that 300 of TIEZA’s 1,025 employees could be affected if the tax is abolished without a replacement funding mechanism.

CHED Chairperson Shirley Agrupis said the commission does not oppose the abolition of the travel tax but appealed for the continuous funding for the Higher Education Development Fund (HEDF).

At present, 85.6% of HEDF is funded by travel tax collections.

“If the travel tax is repealed without a replacement revenue source, CHED’s HEDF will lose 85.6% of its funding. That is a structural loss directly affecting scholarships, research, and institutional upgrading,” Agrupis said.

The NCCA, which receives 10 percent of collections averaging P600 million to P700 million annually, also expressed conditional support because it needs to sustain grants, heritage conservation programs, and cultural institutions nationwide.

Scrapping the travel tax has already been identified as a priority by the Legislative-Executive Development Advisory Council (LEDAC).

Marikina City Second District Representative Miro Quimbo, who chairs the House ways and means panel, earlier said that abolishing the travel tax could generate as much as P22 billion in additional annual government income, noting that the government stands to earn more once the levy is scrapped. —VBL, GMA Integrated News