Philippines Travel Tax Abolition Threatens TIEZA Funds

Funding Crisis for Philippine Tourism

The Philippines' proposed abolition of its travel tax risks leaving the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) without its primary funding source for tourism infrastructure projects in 2027.

TIEZA chief operating officer Mark Lapid stated during a budget hearing on September 28 that between 94 and 95 per cent of the agency's operational budget comes from this travel levy. The agency currently has no allocated funds for its projects under the national budget proposed for 2027.

Lapid expressed concern that this fiscal situation would create difficulties not only for TIEZA but for the wider tourism industry in terms of infrastructure support.

TIEZA Seeks Transition Period

Despite the significant impact on its budget, TIEZA is not opposed to the abolition of the travel tax, according to Mr Lapid. However, he appealed to senators for a transition period to allow the agency to continue its mandate while an alternative funding mechanism is identified.

Extending the collection of the levy temporarily would provide crucial time for TIEZA to secure new financial support. The agency's responsibilities include vital work such as the rehabilitation of local airports and key tourism destinations across the Philippines, including Boracay, Siargao, and Burnham Park in Baguio City.

Government Push and Industry Concerns

The abolition of the travel tax is a priority measure for President Ferdinand Marcos Jr.'s administration. Senate President Win Gatchalian indicated in August that the Senate anticipated approving a measure to eliminate the tax within the current year.

The standard travel tax rates are 1,620 pesos (approximately US$28) for economy and business-class passengers, and 2,700 pesos for first-class passengers, though certain travellers qualify for exemptions or reduced rates. The Philippines stands as the only nation in South-east Asia that continues to impose such a tax on departing travellers.

Implications for Philippine Tourism Development

The potential loss of funding poses a direct threat to the ongoing development of tourism infrastructure across the archipelago. Earlier this year, the Philippine Hotel Owners Association voiced its concerns regarding proposals to remove the travel tax, warning that its abolition could negatively affect financial resources for tourism development initiatives.

Without a clear and dedicated alternative funding stream, the pipeline of projects aimed at enhancing traveller experience and accessibility to Philippine destinations could face significant delays or cancellation, impacting the nation's competitiveness as a global tourism hub.