House OKs bill scrapping travel tax on 2nd reading

By Kenneth Christiane L. Basilio, Reporter

THE HOUSE of Representatives on Wednesday evening approved on second reading a proposal to scrap the travel tax, advancing the measure seeking to cut the levy seen as burdensome for Filipinos.

Lawmakers approved via voice vote House Bill (HB) No. 8464, which seeks to abolish the travel tax, a decades-old levy that was designed to curb overseas travel when the Philippines was seeking to conserve foreign exchange and promote domestic tourism.

“The continued imposition of travel tax oppresses travel demands, dampens tourism growth and discourages mobility,” Romblon Rep. and House Tourism Committee Chairman Eleandro Jesus F. Madrona said in his sponsorship speech. “This is a timely initiative that will not only reduce travel costs but will also stimulate tourism-dependent sectors.”

A travel tax of P1,620 is collected from economy air passengers and P2,700 from first class passengers flying overseas.

Exempt from travel tax are overseas Filipino workers, Filipino permanent residents overseas who stayed less than a year in the Philippines, and children aged two years and below.

Lawmakers have overwhelmingly backed the move to scrap the travel tax, saying the levy has outlived its purpose and now hampers travel for Filipinos, despite concerns from government agencies that rely on it as a steady source of funding.

“No travel tax shall be collected by any government agency or private entity,” according to a copy of the bill. “For flights scheduled on or after the date of effectivity, the collecting authority shall immediately refund any previously paid travel tax to the passenger.”

President Ferdinand R. Marcos, Jr. has declared proposals abolishing the travel levy as a priority of his administration.

Caloocan Rep. Edgar R. Erice raised doubts about the proposal, saying it could encourage Filipinos to travel abroad instead of locally.

In response, Mr. Madrona said: “This proposed measure would not have been included in the LEDAC (Legislative-Executive Development Advisory Council) list if our President had not thoroughly studied it, and our agencies have ensured it would benefit our economy.”

Removing the travel tax would benefit international travelers but cut funding for agencies that depend on it, such as those tasked with improving local tourism infrastructure, Michelle Guerrero Taylan, president of Global Tourism Business Association, said.

“It will be good news for (international travelers) because it means a big reduction in costs when they travel abroad,” she said in a phone call. “But we also have to recognize that the travel tax we pay benefits our local tourism, since it helps fund infrastructure projects.”

Under the law, 50% of the proceeds from travel tax collections go to the Tourism Infrastructure and Enterprise Zone Authority, while 40% go to the Commission on Higher Education for tourism-related education programs.

The remaining 10% goes to the National Commission for Culture and the Arts.

Mr. Madrona said the government has committed to fund programs affected by the cut, assuring that resources will come from the country’s gambling regulatory body and the national lotto commission.

For now, it is difficult to determine the proposal’s overall fiscal impact on government coffers, said Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co.

“It’s a balancing act,” he said in a Viber message.

Ms. Taylan said the government should reduce the tax to around P300 to P500 instead of scrapping it entirely to preserve key funding while easing the burden on travelers.

“They should instead expand exemptions for persons with disabilities and students to make the system more equitable, not an outright abolition,” she said.

DIGITAL PAYMENTS BILL
Also late on Wednesday, the House approved on second reading HB No. 8468, which promotes digital payment systems for government transactions and provides incentives for merchants to adopt them.

“As government and private transactions increasingly move online, the bill seeks to establish clear standards that ensure faster, safer, and more transparent financial processes,” Manila Rep. Erwin C. Tieng said in a statement on Thursday. 

The bill requires all government agencies to adopt digital payments for disbursements and collections, either through in-house systems or by engaging with payment service providers.

For merchants, the bill orders local government units to encourage and incentivize merchants via reduced fees, as well as assist small and micro-merchants in becoming more capable of adopting digital payment systems. 

The push for the measure comes as the Philippines risks falling short of its 2028 digitalization target under the Philippine Development Plan, with BSP Governor Eli M. Remolona, Jr. noting the transition is progressing more slowly than expected.

In 2024, online payments accounted for a 57.4% share by volume and 59% by value of retail transactions, according to the BSP’s 2024 Status of Digital Payments in the Philippines report.