IBC hails House Approval of bill rationalizing taxes on int’l airlines

(Francis Allan L. Angelo )
SOURCE: GUARDIAN May 24,2012

THE ILOILO Business Club (IBC) hailed the passage in the House of Representatives of a bill rationalizing taxes imposed on international airlines.

IBC executive director Lea Lara said the approval of House Bill No. 6022 in the third and final reading on Monday will help push plans to bring in international flights in Iloilo before the year ends.

Lara said the IBC and the Iloilo Economic Development Foundation Inc. (ILED) have been supporting the passage of HB 6022 which was co-authored by Iloilo City Rep. Jerry P. Treñas.

“The approval is indeed a welcome development especially that Iloilo is trying to be a hub for international flights. The bill increases the chance of bringing international carriers who have pulled out of the country because of high operational costs,” Lara said.

The bill removes the 3 percent Common Carriers Tax (CCT) on quarterly gross receipts of international airlines. It also exempts foreign carriers from the 2.5 percent tax on Gross Philippine Billings (GPB) provided that the airline’s home state grants a reciprocal exemption to Philippine air carriers.

The bill also classifies the transport of passengers and cargo by domestic and international air or sea carriers from the Philippines to a foreign country as VAT zero-rated transactions.

Lara said the GPB and CCT have been the main reasons why foreign airlines ceased their non-stop connections from the Philippines to the United States and Europe.

This is in contrast to neighboring states which have liberalized the access of foreign carriers to their airports and are now attracting additional regular flights from various foreign airlines.

Lara said more international flights in the Philippines will also increase chances of international flights in Iloilo.

“Hopefully, we will be able to increase Iloilo airport’s chance of attracting some of them (international carriers) now that fees of international airlines operating in the Philippines have been significantly reduced,” she added.

The move to rationalize airline taxes in Congress was strongly supported by the foreign airline industry, which employs numerous Filipinos and which serves countless of Filipino travelers and OFWs.

ILED President Narzalina Lim said that the approval on third and final reading of the bill was a victory for the country’s tourism industry.

Lim, a former tourism secretary, said any losses from the scrapping of CCT and GPB revenues will be replaced by additional earnings from a more vibrant tourism industry.

Earlier, the Department of Tourism said direct international flights from the Iloilo Airport to Hongkong and Singapore start before the year ends.

Cebu Pacific has plans to fly from Iloilo to Hongkong every other day with four flights every week. It will also fly three times a week the Iloilo to Singapore line as part of its expansion flights from Iloilo to Puerto Princesa, Palawan.