Removal of fuel tax on int'l carriers urged

Posted at 02/28/14 8:37 AM

MANILA - The government should scrap the tax imposed on fuel supplied to international airlines and invest more in infrastructure to prepare the tourism industry for the upcoming regional integration, an industry official said.

With the Association of Southeast Asian Nations (ASEAN) aiming to achieve regional integration by next year, Tourism Congress executive vice president Aileen Clemente told reporters it would be necessary to make sure the local tourism industry is prepared for it.

The Tourism Congress is the private-sector consultative body of the Department of Tourism (DOT) as mandated by the Tourism Act of 2009.

"ASEAN integration will involve free flow and tourism is the first to be affected,” Clemente said, noting that the Philippines could have to look at how it would position itself.

The AEC, which will be established by December next year, seeks to transform Southeast Asia into a region with free flow of goods, services, investments, skilled labor as well as capital.

Clemente said that while the Philippines is becoming an attractive tourist destination, there are still challenges to achieving the goal of getting more foreign travellers to come here.

She noted that the new taxes imposed on fuel suppliers of carriers would adversely affect the country’s attractiveness as a tourist destination as it would lead to higher airfare.

In a recent decision, the Supreme Court (SC) denied excise tax refund claims of Pilipinas Shell Petroleum Corp., which as a result imposed new taxes on fuel suppliers of airlines.

The Court of Tax Appeals (CTA) had earlier ruled in favor of Shell when it claimed for refunds of excise taxes sold to foreign airlines, but the Bureau of Internal Revenue (BIR) brought the case to the SC.

Clemente said the jet fuel used by international airlines should not be slapped with taxes given the reciprocity rules of international agreements the Philippines has with other countries to provide relief to carriers.

 “The taxes could lead to an increase of up to $100 per airline ticket depending on the distance (of travel),” she said.

Aside from scrapping the tax on jet fuel, the government also needs to invest in infrastructure to ensure that higher tourist arrivals could be absorbed by the country.

“If they (tourists) come here, do we have the rooms, the roads, the airports? What we need is a seamless experience,” Clemente said.

The DOT has set a goal of attracting 10 million foreign tourists to the country by 2016.

Last year, international tourist arrivals to the country reached 4.7 million, higher than the 4.3 million in 2012.