Press Release
January 31, 2012

'Creating jobs in the time of impeachment'
Palace backing on bill scrapping common carriers tax sought

Sen. Ralph G. Recto yesterday said the passage of a proposed measure eliminating common carrier's tax (CCT) on international carriers would boost tourist arrivals by 70,000 more on the first year and help create 70,000 new jobs.

"If we remove it, they will come. And it would be truly 'fun' to come to the Philippines," Recto, chair of the Senate ways and means committee, said.

Recto nevertheless urged President Aquino to certify as urgent his proposed measure to speed up its congressional approval.

"We're pushing for this bill amid the humid political weather brought about by the impeachment of a Supreme Court Chief Justice. We're sending the signal that the Palace and Congress have not lost touch of its economic priorities," he said.

Recto added: "If the House prosecution succeeds in ousting the Chief Justice, that's only one job being vacated as against the potential 70,000 new jobs that are waiting to be filled."

The senator nevertheless said the impeachment drama is akin to the biblical "burning bush" that needs to be gawked at "only to put clarity and credibility to the future endeavours of the country, including aspects of the economy."

The senator said the enactment into law of the measure would easily increase passenger traffic, in-bound and out-bound, by 230,000 just in the first year of the "demise" of the CCT.

Recto said the increased tourist arrivals and passenger traffic, citing figures from the International Air Transportation Association (IATA), would generate potential revenues of $45 million for every tourism dollar spent in the country.

He said new jobs being created with influx of more foreign airlines loaded with tourists from all over the globe would also translate to $214 million in annual employee compensation or salaries.

Recto said the estimated tourism tax revenues could be at the vicinity of $5.40 million a year with export earnings accelerating by $1 billion.

"Those opposed to the scrapping of the CCT are trumpeting a tax revenue loss of P1.875 billion a year but the figures of IATA on 'tourism receivables' should be a no-brainer," he said, stressing that the "pluses" far outweigh the "minuses."

The country remains as the only state that imposes a common carriers tax at 3 percent of gross receipts and 2.5% on its Gross Philippine Billings (GPB) on all cargo and passenger revenues originating from the country.

Such tax imposition has turned off many foreign airlines and shipping companies that some have dropped the country from its roll of destinations.

Last year, European carrier KLM Airlines announced ceasing its non-stop flights from Amsterdam to Manila effective this year because of the CCT.

"The approval of this bill seeks to end the exodus of foreign carriers from the country and in turn promote the progressive development of existing air and shipping carriers --gaining more tourists and sending more packages for exports," Recto said in his Senate Bill (SB) 3065.

Recto's Senate ways and means committee will hold its maiden hearing on the said bill this coming Thursday to drum up Palace support on its passage.

"While the impeachment drama continues to unfold daily in the TV life our people, we can rightfully say that the Senate is minding the economic store," he said.

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