[In This Economy] Travel tax: Time to go

Benjamin Franklin once quipped, “In this world nothing can be said to be certain, except death and taxes.” Amid the corruption scandals in 2025, you can’t blame Filipinos for hating even more the idea of paying taxes.

A particularly infamous tax that earned the ire of many Filipinos of late (especially online) is the travel tax, which is P1,620 for economy passengers and P2,700 for first-class passengers. The “standard reduced rate” (for children aged 2 to 12) is half of these amounts, while the “privileged reduced travel tax” for dependents of overseas Filipino workers ranges from P300 to P400.

Except for a few exceptions, most people leaving the country for whatever purpose (including Filipino citizens, permanent residents, and foreigners staying for more than a year here) are required to pay this travel tax.

If you’ve traveled abroad at all, you may recall the inconvenience of paying this tax either when you buy your ticket online or when you pay this over-the-counter (requiring you to line up at a separate counter manned by staff of the Tourism Infrastructure and Enterprise Zone Authority or TIEZA — the government agency tasked to collect this tax). The travel tax is over and above airport terminal fees, and this enrages many people.

A couple of articles recently pointed out that the travel tax is a unique creature in this part of Asia. Sure, other countries charge a “departure fee,” but it’s usually baked into airline ticket prices, and covers the upkeep of airport infrastructure (very unlike the Philippine travel tax).

To fully understand the absurdity of the travel tax, we need to trace its history. You’ll realize that the travel tax has long outlived its original purpose.

A plug

The earliest form of airline travel tax was set by Republic Act 1478 all the way back in 1956, or 70 years ago! This was meant to finance the activities of the Board of Travel and Tourist Industry, tasked to “regulate international travel and tourism with a view to the development of a prosperous Philippine tourist industry.”  

Then in 1970, former president Ferdinand E. Marcos levied yet another travel tax for the development of Rizal Park and “other public parks” under Republic Act 6141. This was on top of the 1956 travel tax.

Fast-forward to 1977, President Marcos provided in Presidential Decree 1183 the harmonization of existing travel taxes, and this serves as the legal backbone of the modern travel tax. Tellingly, one of the stated justifications back then was “to provide adequate funds for the Government programs.” 

At that time, soaring external debt and import payments threatened to deplete the public coffers and the international reserves of the old Central Bank of the Philippines. Under Martial Law, the Philippines was in desperate need of money, largely because of Marcos’ own economic mismanagement. The travel tax is just one of the ways that they thought of to plug the gaping (and growing) hole in the public coffers. This is the milieu in which the modern travel tax was set in stone.

This economic milieu no longer applies to us in the 21^st century. Sure, the government is still incurring massive debt and deficits, but nowhere near the debt and deficits during Martial Law. We are also under no immediate threat of running out of dollars (technically known as a “balance-of-payments” crisis), thanks to sizeable remittances from overseas Filipinos and steady earnings from services like business process outsourcing (BPO).

What I’m saying is that even if the travel tax were to go, we’ll probably survive it. In 2024, TIEZA reported travel tax revenues amounting to P7.8 billion. To give context to that amount, that’s a mere 0.18% of the government’s total revenues that year (of P4.419 trillion). Also, the Discayas allegedly earned nearly four times that amount from various corrupted government contracts from 2022 to 2025.

Removing the travel tax also brings us closer to promoting tourism in the region. After all, outbound travel statistics show that among the most popular destinations are Hong Kong, Japan, Singapore, Taiwan, and Thailand. In doing so, we firmly commit to the 1987 Manila Declaration (“ASEAN shall encourage intra-ASEAN travel and develop a viable and competitive tourist industry”) and the 2002 ASEAN Tourism Agreement (“Member States shall facilitate travel within and into ASEAN by…Phasing out travel levies and travel taxes on nationals of ASEAN Member States traveling to other ASEAN Member States”).

Anti-middle class

Anger over the travel tax seems to be boiling over because of two things. First is the rapid expansion of the middle class, brought about by rapid economic growth in the past few decades. More Filipinos can afford to travel abroad, and therefore need to contend with the travel tax. 

In addition, Filipinos are realizing that traveling outside the Philippines can be a lot cheaper than traveling to Philippine destinations (think of Siargao or El Nido). Until we fix inter-island transportation infrastructure, don’t punish Filipinos for wanting to go abroad instead.

(Incidentally, Palace Spokesperson Claire Castro encouraged Filipinos to “explore the Philippines” first, amid many complaints about difficulties in securing Japanese visas.)

Finally, many Filipinos are realizing that the travel tax doesn’t even fully go to tourism infrastructure. The Tourism Act of 2009 says that half of travel tax proceeds shall go to TIEZA, like the financing of roads, ports, and other infrastructure to promote domestic tourism. It’s funny that many years of travel taxes have not made inter-regional or inter-island travel more attractive for Filipinos. That suggests that travel taxes are not being maximized for the benefit of tourists in general.

Meanwhile, the 2009 law also states that 40% of the travel tax proceeds must go to the Higher Education Development Fund (to finance “tourism-related educational programs and courses”) and the remaining 10% must go to the National Commission for Culture and the Arts. 

In short, our travel taxes are going all over the place. The travel tax would be marginally easier to swallow if its proceeds surely went to transportation infrastructure projects that benefit travelers directly.

Interestingly, the same law foresaw that the travel tax may be phased out sometime in the future. It states that “the national government shall look for alternative funding sources for programs funded by the travel tax in the event of a phase out of travel tax collection following international agreements.”

So, the law providing for the modern travel tax is aware of its own redundancy and needlessness. It may have made sense in the 1950s to 1970s, but not in 2026. It’s high time to abolish a policy as confused and anachronistic as the travel tax. – Rappler.com

Dr. JC Punongbayan is an assistant professor at the UP School of Economics and the author of False Nostalgia: The Marcos “Golden Age” Myths and How to Debunk Them. In 2024, he received The Outstanding Young Men (TOYM) Award for economics. Follow him on Instagram (@jcpunongbayan).