Levying taxes on foreign visitors will make the Philippines — already lagging behind its neighbors in terms of tourism — less competitive, a state-owned think tank said.
“The proposed tax may dampen the country’s tourism industry and consequently derail all efforts of the government in promoting the country as a premier tourist destination. The possibility of government not attaining its projected tourist arrivals until 2022 is likewise not farfetched,” the National Tax Research Center (NTRC) said in a report.
The NTRC noted that lawmakers were looking at new fees to be levied tourists as a means of raising revenues to fund infrastructure projects and compensate for possible damage to the environment.
One possible way of raising revenues from tourists would be through an “accommodation tax” similar to that imposed in Europe.
“The tax may be imposed on foreign visitors at a rate of say P1,000 or P1,500 per person. The proposal would give the government an average revenue ranging from P9.4-billion to P14.2-billion,” the NTRC said.
Another is a tax to be included in airline tickets.
“A foreign tourist tax of P1,620 may be charged to airline tickets, which is equivalent to the travel tax paid by Filipinos when traveling abroad. For the succeeding five years, around P15.3-billion annually is expected to be raised by the government from this source,” the NTRC said.
However, the think tank said that “imposition, as of the moment, may need further study given the negative effect it may pose to the tourism industry and the administrative difficulty in identifying those who travel purely for leisure and/or vacation purposes who are the real target of the proposed tax and those who visit the country for medical treatment, official trip/mission or potential business venture.”
“It may be worthy to weigh the potential revenue to be raised from the said tax proposal vis-a-vis its impact on tourist arrivals and their ability to bring about economic benefits to the country in terms of income, employment, and revenue associated therefrom” it added.
The Philippines was said to be behind other countries in terms of attracting tourists, ranking 79th out of 136 economies in the 2017 Travel and Tourism Competitiveness Report.
The International Air Transport Association (IATA) recently urged the government to reconsider plans to raise tourist taxes.
“The more tax you put on the passenger, less prosperity you will bring into the country,” IATA Director General and Chief Executive Officer Alexandre de Juniac said.
Short-term budget gains quickly disappear when tourist arrivals drop, he said, adding that the Philippines should instead focus on making wise investments in the tourism infrastructure that will encourage people to visit.
“The extra tourist dollars you attract will pay the investments and make a greater economic contribution,” de Juniac said.