MANILA – The Department of Finance is amenable to Congress’ proposal to remove the country’s common carrier's tax if lawmakers can ensure that the estimated P1.6 billion revenue loss from the measure would be countered.
Finance Secretary Cesar Purisima recently wrote House Committee on Ways and Means Chair Hermilando Mandanas (Batangas, 2nd District) and Senate Committee on Ways and Means Chair Ralph Recto, to inform them of the DOF position.
The agency “interposes no objection” to the repeal of common carrier's tax “provided that countervailing revenue sources/measures shall be identified” to recoup an estimated P1.6 billion in losses.”
“We subscribe to the position that any revenue loss measure enacted in Congress should at least be compensated by a corresponding revenue gain,” he said.
Purisima recently met with officials of the Department of Tourism to discuss the issue.
He also cited Section 118 of the National Internal Revenue Code of 1997, which requires for a three percent CCT of the airlines’ and shippers’ quarterly gross receipts and a 2.5 percent gross Philippine billings tax on their operations in the Philippines.
Earlier, Air France-KLM announced its plan to remove its direct Manila to Amsterdam flights early next year due to the CCT and GPBT.
Thus, lawmakers have initiated hearings on this issue to address the problem.
Purisima said “our position is consistent with the recent World Bank report [last June] which states that CCT should be repealed to be consistent with international practice and not hinder growth of tourism sectors.”
“We acknowledge the role of tourism in generating investments, employment and reducing poverty in the country,” he said.
On the other hand, Purisima said they were against the removal of GPBT, citing that “it is in the nature of income tax” and therefore should not be dropped.
The Finance chief stressed that “we do not support its elimination…Freeing intern