The country’s finance chief is eyeing to push for the abolition of the travel tax.
Carlos Dominguez, Department of Finance (DOF) secretary, also said during the joint lunch meeting of the Rotary Club of Makati West and the Rotary Club of Manila that he is hoping the documentary stamp tax (DST) will be reduced.
Dominguez was asked about his position on these taxes during the event at the Tower Club yesterday.
The Philippine travel tax is a levy imposed by the national government on all citizens of the Philippines, permanent resident aliens, and non-immigrant aliens who have stayed in the Philippines for more than a year and are traveling to other countries.
The full travel tax rates are P1,620 and P2,700 for economy/business and first-class passengers, respectively.
The Tourism Infrastructure and Enterprise Zone Authority (TIEZA) gets its main financial support from the collection of travel tax.
“The travel tax is in place and definitely we will look at its elimination. I had a meeting with the TIEZA people recently, and I noted that they have P14 billion in their account,” Dominguez said.
“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,” he added.
A report published by the National Tax Research Center in 2016 said the purpose of its imposition has evolved from a tool to restrict foreign travels and encourage domestic tourism into becoming a major contributor to government’s tourist-related projects and programs.
The report said half of the total travel tax goes to TIEZA, 40 percent goes to the Higher Education Development Fund administered by the Commission on Higher Education, while the remaining amount goes to the National Commission for Culture and the Arts.
Meanwhile, Dominguez was also asked about the DST which was increased under the first tax reform package or the Tax Reform for Acceleration and Inclusion Law.
According to one of the Rotary members, the DST has slowed businesses as it slapped additional costs.
“The increase in the DST was not part of the tax reform program. It was inserted during the bicam,” Dominguez said.
“During the time when you have a bicam, the (DOF) is not allowed to speak so that was inserted and unfortunately, we were unable to register our objection on that,” he added.
The bicameral committee-approved version doubled the DST rates on documents, instruments, loan agreements and papers such as bank checks from P1.50 to P3.
DST on property insurance, fidelity bonds and other insurance, indemnity bonds, and deeds of sale, conveyance and donation of real property were not changed, while on debt instruments it was increased by 50 percent.
“We definitely don’t agree with it and hope that in some future legislation the DST will be reduced,” Dominguez said.
“It’s not part of our program. We will attempt to reduce it in the future,” he added.
Asked if it can be done under the succeeding tax packages pending in Congress, the finance chief said: “Our process for legislation is long and tedious and I can’t promise it now.”
Dominguez also expressed confidence that Congress could pass this year the remaining packages of the comprehensive tax reform program (CTRP).
The finance chief said he hopes Congress could pass Package 2 of the CTRP — the proposed Corporate Income Tax and Incentives Rationalization Act — in the first quarter, so that it could be signed into law by March.
The Congress will resume session on January 20 following its yearend recess, and then adjourn for its Lenten Break on March 13.
“The sooner Congress passes the bill, the quicker potential investors will discard their wait-and-see attitude and bring more business to the country. This will have incalculable benefits for our economic growth,” Dominguez said.
