Monday, February 7, 2011

Europeans want airline taxes lifted for open skies policy

Europeans want airline taxes lifted for open skies policy

Should the Aquino administration's open skies policy push through, taxes on foreign carriers should be lifted so that more airlines would come to the Philippines, European businessmen said Wednesday.

"The European Chamber of Commerce of the Philippines [ECCP] welcomes the open skies policy of the Aquino administration. Tourism has the chance to become one of the big contributors to foreign exchange earnings and employment," ECCP executive vice president Henry Schumacher said in a statement.

Schumacher said the open skies policy will not succeed if the international aviation industry will be "burdened with excessive and unfair taxes."

"It has to be understood that the international aviation industry is the most crucial partner of Philippine tourism. It is indisputable that the success of Philippine tourism will greatly depend on the country's international connectivity, which is, in turn, a function of the state of the international aviation industry in the Philippines," he said.

The number of international airlines doing business in the Philippines has dwindled over the years.

Schumacher said one of the reasons why the number of airlines operating in the country has not increased is because of the "unfriendly and grossly onerous tax regime for international airlines in the Philippines."

"The current tax regime in place consists of common carriers tax (CCT) of 3 percent of gross receipts, gross Philippine billings (GPB) tax of 2.5 percent, or an aggregate taxation on their gross revenue of 5.5 percent," he said.

These taxes and their pertinent regulations are not consistent with international standards and practices, Schumacher said, adding the Philippines is the "most expensive investment destination for airlines" in Southeast Asia.

"Philippine international carriers are not subject to these types of taxes in the routes where they compete with foreign airlines. This discrimination contravenes the principles of the International Civil Aviation Organization to which the Philippines is a signatory," Schumacher said.

According to him, the government earns P3.2 billion from the CCT and GPB taxes.

"The continued erosion of foreign and, perhaps, Philippine carrier flights that support Philippine trade and economic growth will benefit the other Asian economies in terms of business and employment opportunities," he added.

"The trade-off between loss in tax revenue and competitiveness of the air transport sector should be viewed as an investment of the government on the economy," Schumacher added.


NEHA JAIN                                                                                                                

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