InterAksyon.com
The online news portal of TV5
MANILA, Philippines – A Senate bill removing the common carrier’s tax (CCT) on foreign airlines will boost tourist arrivals, its author Senator Ralph G. Recto said.
Recto, who chairs the Senate Ways and Means Committee, said the removal of the CCT will mean foreign carriers can resume flights to Manila.
A member of the majority party, the senator asked President Benigno Aquino III to certify the bill as urgent.
The 39-member Airline Operating Council (AOC) welcomed the senator’s proposed measure, saying direct flights between Manila and Europe would resume immediately, helping the Philippine government attain its target of drawing in 10 million tourists by 2016.
Air France-KLM, which had been in the Philippines for 60 years, canceled direct flights from Manila to Amsterdam because of the CCT. AF-KLM was the only remaining foreign carrier mounting direct flights to Europe.
It still flies the Manila-Taipei-Manila route, so as not to cut the link with Europe, according to Ma. Lourdes San Juan, assistant station manager.
Asked if the carrier would resume direct flights once the CCT is removed, she said, “Yes, definitely, hindi naman namin sinasabi na tanggalin and CCT. Dapat ang i-tax lang ang fare actually paid for and not the fare reflected in the ticket.”
Foreign carriers had complained that the CCT levied on them was based on the ticket price, which is higher than the actual fares that passengers pay.
Ed Monreal, AOC president, said the CCT was on top of the high cost of aviation fuel. “Overhead expenses are much higher in the Philippines than elsewhere, that’s why many European airlines have stopped coming here.”
He said carriers that stopped their direct flights to or from Manila could resume operations if the cost of mounting a flight would go down.
Besides AF-KLM, other carriers that dropped their direct flights were British Airways, Lufthansa, Alitalia, and Swiss International Airlines.
Steven Crowdey, Board of Airline Representatives (BAR) first vice chairman, said the Philippines has two burdensome taxes, the CCT and Gross Philippines Billings (GPB).
The taxes are payable on gross revenues for passenger tickets, cargo and excess baggage charges on flights from the Philippines, even for sales made outside of the country.
Crowdey said the Philippines is the only country charging such taxes, leading to the exodus of carriers that mount long-haul flights.
“Unlike hotels, aircraft capacity can be moved easily to countries that provide better returns,” he said, adding that neighboring countries benefit from increased trade and tourism flows.
“The economic activity lost from carriers that have left Manila would have generated taxes in excess of those that would have been collected had the carriers stayed,” Crowdey said.
The taxes also contravene International Civil Aviation Organization (ICAO) principles since they discriminate against foreign carriers. The Philippines is a signatory to ICAO.
Carmelo Arcilla, Civil Aeronautics Board (CAB) executive director, said the country needs direct flights from Europe to support the tourism sector.
He said that tourist arrivals from Europe have not grown significantly over the past decade, settling at around 300,000, or 10 percent of the total at end-2010.
