Business and tourism stakeholders in Cebu welcome the signing into law of RA 10374 which grants international airlines exemption from paying the 3 percent common carrier tax on receipts and income derived from transporting passengers.
The law is long overdue said Jenny Franco, Cebu chapter president of the National Association of Independent Travel Agencies of the Philippines.
Qatar Airways suspended their Cebu-Doha flights in March last year, over the common carrier tax issue. Qatar Airways brought the bulk of tourists from the Middle East and European countries to Cebu.
Franco said that RA 10373 which was signed by the President last March 7, means the government is already taking tourism seriously.
“What we can do however is to solve all the other issues like the US Federal Aviation Administration and the European Union’s downgrading of the country’s airport rating from Category 1 to Category 2 in 2008 because while we take out the tax, the security issue is still there. Europeans don’t come here because it’s not covered by their insurance because of that downgrading,” said Franco.
Hotel Resort and Restaurant Association of Cebu (HRRAC) president Hans Hauri agreed with Franco saying the new tax exemption law is the second of three steps that the government needs to undertake to create more air traffic in the country.
According to Hauri, Step 1 was the Executive Order 29 declaring an Open Sky Policy and the third step to complete all three is the reclassification of the Safety of Airspace from level 2 to level 1.
Islands Group president and Philippine Retailers Association Cebu chapter immediate past chairman Jay Aldeguer welcome the government’s move to scrap the Common Carriers Tax and Gross Billing Tax saying this will not only favor tourism but trading and investments as well.
Cebu Chamber of Commerce and Industry immediate past president Prudencio Gesta said that with more international airline companies coming here soon, “we will be at par with other countries and hopefully experience a more robust growth in terms of arrival.”
Tourism Secretary Ramon Jimenez, Jr. said that they welcome the President’s signing into law the rationalization of the common carriers tax that was imposed on international air carriers.
DOT 7 regional director Rowena Montecillo added that they are now coordinating with the Mactan Cebu International Airport Authority (MCIAA) in inviting international airlines Cebu.
Case in Point
Based on DOT data from 2006 to third quarter of 2012, the European market has been steadily growing from 44,346 in 2006, 64,547 in 2007, 71,155 in 2008, 75,562 in 2009, 76,352 in 2010 and 79,937 in 2011 with an average growth rate of 10.44 percent.
Less than a year after Qatar Airways suspended their flights, the number of Europeans have shown a decline as of the third quarter last year to only 67,127 total Europeans coming to Cebu.
Tourists from the Middle East also showed a decline last year from 7,480 in 2011 to only 3,786 as of August last year.