The paper explores the possibility of imposing a foreign tourist tax in the Philippines, its revenue potential and implications on local tourism industry. It also examines the practices in the ASEAN and other selected countries.
Total visitor arrivals in the country was generally on an uptrend during the past 16 years except in 2003 and 2009. Said declines were due to the outbreak of the severe acute respiratory syndrome (SARS) that affected travel and tourism in Asia, and the global economic crisis, respectively.
In the ASEAN region, the Philippines ranked 6th in terms of total number of visitor arrivals from 2011-2016, behind Malaysia, Thailand, Singapore, Indonesia, and Vietnam.
Foreign tourist tax, also known through various names such as accommodation tax or sojourn tax, is common in most European countries. Some countries apply the tax locally while others impose it on a national basis. Some countries base the tax on hotel category/type while others compute it as a percentage of hotel room charges.
The tourist tax is specifically levied on foreign tourists, which can be in the form of entry taxes, hotel taxes or other specific tourism industry-based tax. Its imposition has gained interest among policymakers and stakeholders as it is a potential source of revenue to finance tourism infrastructure and tourism-related projects and programs.
A foreign tourist tax in the nature of an “accommodation tax” of say PhP1,000 or PhP1,500 per person would generate for the government an average annual revenue ranging from PhP9.4 billion to PhP14.2 billion.
On the other hand, a foreign tourist tax of PhP1,620 (US$31.91) which is equivalent to the travel tax paid by Filipinos when traveling abroad may be included in airline tickets. Around PhP15.3 billion annually is expected to be raised by the government out of the said proposal.
However, the proposed tax may dampen the country’s tourism industry and consequently derail all efforts of the government in promoting the country as a premier tourist destination. The possibility of government not attaining its projected tourist arrivals until 2022 is likewise not farfetched.
Considering also that the country lags behind other ASEAN member countries in terms of attracting tourists, a tax imposed thereon would further make the country uncompetitive.
