Palace expects more tourists as foreign airlines get tax breaks

by Willard Cheng, ABS-CBN News

Posted at Jan 24 2013 04:38 PM | Updated as of Jan 25 2013 12:38 AM

MANILA, Philippines - The Palace expects more tourists to visit the Philippines this year, and vows to build more tourism infrastructure and improve transportation.

Presidential spokesperson Edwin Lacierda says the removal of the common carrier's tax will also help bring in more tourists.

"That will be a forgone revenue of about P1.1 billion. But what do we expect in return? We expect more tourists to come in… That's why we have been making sure that we are prepared for the onslaught of tourists," Lacierda said.

On Wednesday, the Senate ratified a bicameral conference committee report removing the common carriers' tax and Gross Philippine Billings Tax (GPBT) slapped on foreign airlines and shipping firms.

The Senate said the 2.5% GPBT and 3% common carriers' tax on cargo and passenger revenues originating from the Philippines have been waived as long as the home country of the foreign carriers agree to give a similar tax exemption to their Philippine counterparts.

The removal of the two taxes levied on foreign carriers have long been urged by non-Philippine airlines and shipping companies as these have made them less competitive in the market.

The Philippines is targeting over 5 million foreign tourist arrivals this year. Tourist arrivals in the Philippines reached 4.27 million in 2012, up by 9% from the 3.92 million visitors in 2011.