Senate President Sherwin Gatchalian said two tax measures—the abolition of the travel tax and an increase in the e-vape tax rate—are expected to be passed this year.
In an interview after his keynote speech at the General Membership Meeting of the Management Association of the Philippines (MAP), Gatchalian said the two bills have already been slated for passage this year.
On e-vapes, Gatchalian said the tax increase is part of the government’s revenue-raising measures on 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 in the e-vape tax rate is not yet clear, but Gatchalian said, “It will be the same as the cigarettes.”
The senator said the increase in the e-vape tax rate would be introduced as an amendment to the existing law.
On the abolition of the travel tax, Gatchalian said the House of Representatives has already approved the measure and that the Senate is expected to approve it within the year.
In particular, Senate Bill No. 1849 seeks to remove the travel tax imposed on Filipinos and other ASEAN nationals in compliance with regional agreements.
However, the removal of the travel tax is expected to result in a revenue loss of around PHP6 billion. The proceeds from the travel tax are currently earmarked for government agencies such as the Tourism Infrastructure and Enterprise Zone Authority, the Commission on Higher Education, and the National Commission for Culture and the Arts, as well as other charitable projects.
Gatchalian, however, said the revenue loss is expected to be offset by higher tourism receipts as lower travel costs entice 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 calls for the phasing out of travel taxes on travel within Southeast Asia.
At present, the travel tax is PHP1,620 for economy-class passengers and PHP2,700 for first-class passengers.
