MANILA, Philippines - The House of Representatives will exempt foreign airlines from taxation to entice them to return their direct flights to the country, Iloilo Rep. Jerry Treñas said yesterday.
“The exit of international carriers from the country, where they are taxed, has been in stark contrast to the growth in services experienced by neighboring Asian countries that do not tax foreign airlines,” he said.
Treñas, of the ruling Liberal Party, is one of the authors of a bill exempting foreign carriers from the carrier’s tax and gross billings tax.
European airlines have terminated their direct flights to Manila one after another, citing heavy taxation. Most of them are picking up their Manila passengers from aviation hubs in the region like Singapore and Bangkok in Thailand.
The last carrier to end its direct flight was KLM.
Many Filipinos going to Europe take Middle Eastern airlines.
“The country’s links with the global markets in tourism and in trade are poor relative to neighboring countries and will suffer substantial further deterioration if corrective statutes are not put in place,” Treñas said.
“Efficient air transport connectivity enables the movement of more than 8.2 million overseas Filipino workers, including those in ship crewing, health care, information technology, and hospitality industries,” he added.
He said direct flights provide seamless travel for tourists, businessmen, returning Filipinos, and other travelers.
“In other words, the imposition of the carrier’s tax and gross billings tax on foreign airlines means more losses than gains for the government,” he said.
He pointed out that the country’s loss is the gain of its neighbors where foreign airlines have shifted their operations.
The House approved the tax exemption proposal on second reading before Congress went on its five-week Lenten break last month.
Treñas said he expects the measure to be passed on third and final reading when Congress reconvenes early next month.