The Palace's formal support on a bill lifting taxes imposed on foreign carriers will be sought by the Senate in a bid to expedite its approval in Congress, a lawmaker said, a move that will be considered by Malacañang.

Sen. Ralph G. Recto, ways and means committee chairman, said in a statement that he will ask President Benigno S. C. Aquino III “to certify as urgent” Senate Bill (SB) 3065 which is proposing to scrap the 3% common carriers tax (CCT) and 2.5% gross Philippine billings tax (GPBT) imposed on foreign airlines and shippers.

“We’re pushing for this bill... sending signal that the Palace and Congress have not lost touch of its economic priorities,” he said, noting that the move will also result in higher tourist arrivals and the creation of more jobs.

At the Palace, Secretary Ramon “Ricky” A. Carandang of the Presidential Communications Development and Strategic Planning Office said that they were “open” to discussing a change in taxation, provided that “it helps tourism and the impact on revenues can be justified.”

“We’ve already written Congress on how the revenues can be offset. Certainly, we’re open to it. We’re leaving it to Congress to figure out a way to help mitigate the revenues,” he said in a phone interview.

Mr. Carandang admitted that the decision of Air France-KLM last year had an impact on the policy stance, but noted that this was also in line with efforts to improve tourism.

“KLM had an impact, but it’s mostly because it fits into the long-term goal; developing tourism is a big priority of this administration,” said Mr. Carandang. The Senate committee will hold its first hearing on the bill tomorrow “to drum up
Palace support on its passage,” the statement said.

Congress earlier said it plans to hasten the passage of bills lifting the CCT and GPBT after Air France-KLM decided to phase out Manila-Europe flights due to the levy.

The airline’s Manila-Amsterdam flight is the last direct link of the Philippines to Europe.

Mr. Recto earlier said that his committee plans to pass the measure by the second quarter this year. An identical counterpart bill has been pending third reading approval at the House of Representatives since February last year.

Officials of foreign chambers sought for comment welcomed the move, noting that gains such as receipts from higher tourist arrivals will compensate for the removal of taxes.

The move to obtain Mr. Aquino’s “backing of the bill as urgent would be most welcome,” Robert M. Sears, American Chamber of Commerce of the Philippines (Amcham) director for external affairs, said in a text message yesterday.

“Passage of the bill is important to tourism industry increasing international visitors’ arrivals, and also maintaining a level playing field for the carriers,” he added.

European Chamber of Commerce of the Philippines (ECCP) Executive Vice-President Henry J. Schumacher concurred, adding in a separate text message: “We believe that doing away with common carriers tax and gross Philippine billings tax
will support tourism and will lead to higher tax collection.”

ECCP President Hubert D’Aboville explained that higher tourist arrivals will also create jobs in the countryside.

“This would increase employment nationwide especially in the remote areas that will be visited to by tourists,” he said in a telephone interview yesterday.

In another text message, John D. Forbes, Amcham execute director, said “presidential certification of the urgency of the bill being considered by the Senate ways and means committee would support the stated position of (Finance)
Secretary (Cesar V.) Purisima.”

He added that “enactment [of the bill] is urgent to prevent further reduction of services by foreign airlines bringing tourists, businessmen and others to the Philippines.”

The Department of Finance (DoF) last month said it will not object to removing the CCT if Congress passes a measure that will compensate for the revenue loss. It, however, noted that the GPBT should be maintained.

Granting of tax exemptions to foreign carriers was highly opposed by the DoF, as it had reasoned out that local carriers also face similar taxes.

For Mr. D’Aboville, lifting both CCT and GPBT will allow all parties “to move forward.”

“Removing the taxes could have a tremendous impact to the country’s economy,” he said.

Source: Business World; News; 01 February 2012