The abolition of the common carriers tax (CCT) and the gross Philippines billings tax (GPBT) will translate to lower transport costs and boost Philippine export revenues by $1 billion, according to the International Air Transport Association (IATA).
The Philippine government levies a 3% CCT and 2.5% GPBT on foreign airlines calling in the Philippines.
The tax abolition will mean cargo transport cost savings of P34 billion.
IATA figures showed 596,000 tons of freight were shipped by air to, from and within the Philippines in 2009, with the local aviation sector contributing only 2.4% to the country’s gross domestic product.
The lifting of the taxes will also benefit travelers to the tune of P575 billion, of which P298 billion will be enjoyed by the Filipino traveling public.
Specifically, the move will clip by 2.5% the cost of international passenger travel, in the process boosting by 1.9% international arrivals and departure in the Philippines. This will translate to $38 million to $78 million in potential gains owing from higher tourist arrivals.
“Air transport is critical for global business and tourism,” IATA senior economist George Anjaparidze said. “The air transport links improve productivity, facilitates foreign direct investment and promotes agile business models.”
He added, “Removing the CCT and GPBT taxes would mean a potential gain for the wider Philippine economy from increased tourism and trade.”
Some airlines, including Air France/KLM, have halted direct flights, particularly those from Europe, to the Philippines because the CCT and GBP taxes.
The Joint Foreign Chambers in the Philippines also earlier asked government to abolish the CCT and GPBT in order to level the playing field between foreign and domestic carriers. Philippine flag carriers are exempt from the levies.
Government has so far resisted such calls, saying the tax removal will leave the national coffers poorer by P2.5 billion each year.
The House of Representatives is currently deliberating on House Bill 444 which seeks to exempt international air carriers from payment of the CCT and GPBT.
Airplane Ready For Take Off by Stuart Miles http://www.freedigitalphotos.net/images/view_photog.php?photogid=2664
