The Senate on Wednesday approved on third and final reading a bill seeking to scrap taxes on international carriers and shippers in a bid to help the Philippines become a tourism hub in the region.

Voting 16-0 the chamber approved Senate Bill 3343 a day after President Benigno Aquino 3rd certified it as urgent.

Under the proposed bill the gross Philippine billings tax (GPBT) will be waived provided that the country of origin of a foreign carrier grants the same exemption to Philippine airlines.

The bill also exempts foreign airlines from the common carriers tax (CCT) and the value added tax. At present, international carriers are required to pay the 2.5 percent GPBT and 3 percent CCT.

Senator Franklin Drilon, acting chairman of the Ways and Means Committee, however admitted that the bill will forego revenues of up to P2.5 billion (P919 million from GPBT and P1.602 billion from CCT), but he made it clear that the expected loss can be recovered be the country from the projected increases in tourist arrivals.

He explained that because of the lower and more affordable airline fares and the expected surge in the airline industry, tourist arrivals will dramatically increase.

“The removal of these airline taxes will improve the present situation where our tax policies seem to directly contravene our tourism goals,” said Drilon earlier.

The enactment of the measure will also result in lower traveling costs for overseas Filipino workers who will be enjoying lower fares to the country.

Drilon noted that with the approval of the bill, international arrival is expected to increase to 5.55 million in 2013, 6.75 million in 2014, 8.126 million in 2015 and 10 million in 2016.