Gatchalian sees passage of bills abolishing travel tax, raising tax rate on vape products

Senate President Sherwin Gatchalian said two tax measures—the abolition of the travel tax and an increase in the tax on e-cigarettes or vapes—are expected to be passed this year.

In an interview after his keynote speech at the Management Association of the Philippines (MAP), Gatchalian said the two bills have already been slated for passage within the year.

On the proposed vape tax increase, Gatchalian said the measure is part of the government’s revenue-raising efforts through sin taxes.

“We will increase the taxes on vaping because we’ve seen that many kids are getting into vaping. So, we will increase the taxes on vaping,” said Gatchalian.

The extent of the proposed increase has yet to be determined, but Gatchalian said, “It will be the same as the cigarettes.”

The proposed e-vape tax increase would be introduced as an amendment to the existing law, he said.

Travel tax

On the proposed abolition of the travel tax for passengers traveling to international destinations, Gatchalian said the House of Representatives has already approved the measure and that Senate approval is expected within the year.

Senate Bill No. 1849 seeks to remove the travel tax imposed on Filipinos and other ASEAN nationals to comply with regional agreements.

The abolition, however, is expected to result in a government revenue loss of around PHP6 billion. The proceeds currently fund government agencies and programs, including the Tourism Infrastructure and Enterprise Zone Authority, Commission on Higher Education, National Commission for Culture and the Arts, and various charitable projects.

Gatchalian said the revenue loss could be offset by higher tourism receipts as lower travel costs encourage more foreign tourists to visit the Philippines.

“So, even if the PHP 6 billion is lost, this will be offset by the growth in the tourism industry,” he said.

The Philippines remains the only country in the ASEAN region that imposes a mandatory travel tax on departing citizens and residents, despite signing the 2002 ASEAN Tourism Agreement, which seeks to phase out travel taxes on travel within Southeast Asia.

Currently, the travel tax is PHP1,620 for economy-class passengers and PHP2,700 for first-class passengers.