PPP, national budget touted as alternate sources of tourism infra funding — analysts

By Beatriz Marie D. Cruz, Reporter

THE government must ensure alternate funding for tourism-related infrastructure if it abolishes the travel tax, citing risks to the growth of domestic tourism, analysts said.

“If the abolition of the travel tax creates a funding gap for tourism promotion or infrastructure, it will be critical to establish alternative mechanisms — whether through public-private partnerships or dedicated budget allocations, to ensure ongoing airport upgrades and destination development are not delayed,” Dino Mari G. Palanca, director for marketing and research at property consultant Savills Philippines, said in an e-mail to BusinessWorld.

The House of Representatives Committee on Tourism last month approved a proposal to abolish the travel tax, citing the financial burden on those traveling overseas.

Mr. Palanca said removing the travel tax would cut funding for domestic tourism infrastructure, such as improvements to airports, inter-island connectivity, and access roads.

“To safeguard the tourism industry, policy adjustments must be paired with sustained infrastructure investment and stronger destination competitiveness,” he noted.

The government collects a travel tax of P1,620 ($28.35) from economy air passengers and P2,700 ($47.24) from first class air passengers departing for overseas.

The Tourism Infrastructure and Enterprise Zone Authority (TIEZA), which develops and manages the country’s tourism facilities, earlier said that 90% of its budget is funded by travel tax.

The levy was authorized by a Presidential Decree at a time when the Philippines was trying to conserve foreign exchange.

“The travel tax is an antiquated tax and is not consistent with the modern times, where global travel is no longer considered a luxury,” Eleanor L. Roque, tax principal of P&A Grant Thornton, said via Viber.

The current law allocates 50% of the proceeds from travel taxes to TIEZA, 40% to the Commission on Higher Education (CHED) for tourism-related education programs, and 10% to the National Commission for Culture and the Arts.

Colliers Philippines Director and Head of Research Joey Roi H. Bondoc said the flood control corruption scandal of 2025 demonstrated that the government can do away with unnecessary levies if funds are properly allocated.

“The flood control issue only shows we actually have funds for infrastructure projects. It’s just that they were misallocated or being diverted to other uses,” he said via telephone.

The government could lose around P8 billion yearly if the travel tax is abolished, Finance Secretary Frederick D. Go has estimated.

In 2025, the authorities collected about P8.7 billion in travel tax revenue.

The removal of the travel tax, coupled with investments to improve tourism infrastructure, would help boost domestic travel in the long term, analysts said.

Mr. Bondoc noted that one benefit could be increasing purchasing power, with hotels, restaurants, and retailers poised to reap the dividends.

“Increased affordability often encourages more frequent travel overall, benefiting both international and domestic segments, particularly if regional airports and emerging leisure corridors continue to improve access and reliability,” Mr. Palanca said.