Senate's 16-0 vote abolishes carriers' and billings taxes

By Butch Fernandez, BusinessMirror

Posted at Dec 20 2012 08:35 AM | Updated as of Dec 20 2012 09:53 PM

The Senate on Wednesday passed by unanimous vote on final reading a Malacañang-backed bill conditionally waiving P2.5 billion in combined revenues from the so-called gross Philippine billings tax (GPBT) and the common carriers’ tax (CCT) paid by shippers and international carriers, in a bid to boost tourist arrivals.

Sen. Franklin Drilon, principal sponsor of the measure, said that the removal of these taxes on airline companies and shippers is expected to “improve the present situation where our tax policies seem to directly contravene our tourism goals.”

Voting 16-0, senators approved Senate Bill 3343, which President Aquino earlier certified as urgent, apparently prompting the Senate to pass the measure on second and third readings in one sitting.

In securing approval of the measure, Drilon explained that the bill’s enactment into law will upgrade the country’s status as a tourism hub and elevate it “as a viable gateway to Asian neighbors.”

The senator said the abolition of the billings and carriers’ tax would also “usher in the great promises of the highly touted tourism sector of our country as it will boost tourist arrivals and help increase the capacity of local and foreign carriers for tourists to 15 million seats from the current 6 million seats.”

Under the current setup, international carriers and shippers are required to pay 2.5 percent GPBT and 3 percent CCT.

Drilon said that once the bill is signed into law, the GPBT will be waived “provided that the foreign carriers’ countries of origin will agree to also give a similar tax exemption to Philippine carriers.”

He added that even though the bill would forego revenues of up to P2.5 billion (P919 million from GPBT and P1.602 billion from CCT), “such foregone revenues can be easily recouped, if not surpassed, amid projected increases in tourist arrivals due to lower and more affordable airline fares and the expected surge in the airline industry.”

The Department of Tourism, Drilon said, has estimated that the increase in tourist arrivals will generate P455 billion in 2016 and will provide 6 million jobs.