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House panel OK’s repeal of common carriers tax




Posted on March 14, 2012


A MEASURE seeking to address foreign airlines’ tax concerns was approved by legislators yesterday, with a House panel agreeing to drop one tax and conditionally maintain another.

Approved by the House of Representatives ways and means committee was House Bill (HB) 4444, filed by Iloilo City Rep. Jerry P. Treñas, which sought to settle a row over the 3% common carriers tax (CCT) and 2.5% Gross Philippine Billings Tax (GPBT).

Foreign airlines complained that they were being unduly burdened and the taxes were held up as the reason why direct flights to Europe were being phased out.

Legislators agreed to repeal the CCT, which aviation industry executives claimed was unique to the Philippines, and drop the GPBT only if foreign carriers’ home countries agreed to annul counterpart taxes.

"We have to balance our interests," Cagayan de Oro City Rep. Rufus B. Rodriguez (2nd district) said.

Philippine Airlines Lawyer Clara C. de Castro emphasized that the reciprocity provision should be strictly enforced.

"What we want is reasonable and fair for Philippine Air Lines and other local carriers operating in foreign countries. We do not enjoy the same privilege [of not having to pay the CCT]. While we understand fully that this is for national interest, we should also strike a balance between that and the plight of the local airline industry," Ms. de Castro stressed.

The Finance department, which earlier opposed the repeal of the taxes, posed no objection to the proposed law as long as the estimated loss of P1.6 billion will be recouped by tourism and other investments.

At the Senate, ways and means committee chairman Sen. Ralph G. Recto is targetting approval of a counterpart bill by June.