Where do your travel tax proceeds go?

The government’s tax research arm wants transparency on how the travel tax proceeds are spent.

In a report titled “A Comprehensive Review of the Philippine Travel Tax,” the National Tax Research Center (NTRC) urged the Tourism Infrastructure and Enterprise Zone Authority (Tieza) to “require the mandatory submission of reports on the utilization of the travel tax allocated to the Commission on Higher Education (CHEd) and the National Commission for Culture and the Arts (NCCA) to ensure that the travel tax is being used for its intended purposes.”

The NTRC said proceeds from the P1,620 being collected from economy class passengers and the P2,700 collected from first class passengers leaving the country were shared by the Tieza, CHEd and NCCA.

The proceeds were intended to be spent on tourism-related educational programs in the case of the CHEd and in art and cultural activities in the case of the NCCA.

Tieza, an agency which does not get government budgetary support, was supposed to utilize its share—50 percent of the total—mostly on tourism infrastructure.

Of the average P1.014 billion received by Tieza from travel taxes yearly between 2000 and 2014, over 55 percent went to infrastructure projects and capital outlay, while the rest went to administrative expenses.

“As of the moment, there are 89 infrastructure projects that are under construction … For 2014, Tieza completed 19 infrastructure projects, four of which were in Region 4, three each in Regions 3 and 8, two each in Regions 2 and 9, and one each in the National Capital Region, Regions 1, 6, 7 and 12,” the NTRC said, citing Tieza data.

In 2014 alone, Tieza’s share from travel tax collections amounted to P1.926 billion.

But for CHEd and NCCA, which receive 40 percent and 10 percent of annual collections, respectively, the NTRC said there was no way to track how they spend their shares.

In the case of CHEd, travel taxes go to the Higher Education Development Fund (HEDF), making it “the biggest contributor and reliable source of the HEDF.” NTRC said, however, the agency “admitted that it cannot directly identify which among its projects and programs are tourism-related.”

In 2014, Tieza remitted to the Bureau of the Treasury P1.541-billion worth of CHEd’s share from the travel tax take, even as actual Department of Budget and Management (DBM) releases reached P1.867 billion.

As for NCCA, its share remitted by Tieza to the Treasury under the National Endowment Fund for Culture and Arts account amounted to P385.2 million in 2014.

Still, NTRC pointed out that since the two agencies do not generate revenues and depend on annual budgetary appropriations, “the removal of travel tax allocated to them would cripple the funds they are maintaining.”

The Tieza data showed that in 2014, over 2.5 million passengers paid travel taxes—whether in full or the standard reduced and privileged reduced amounts.

In 2014, travel tax collections hit P3.852 billion, up 4.3 percent from P3.692 billion in 2013, accounting for a mere 0.03 percent of the gross domestic product.

The NTRC said the purpose of the almost 60-year-old travel tax—one of the oldest taxes in the country—had “evolved from a tool to restrict  foreign travels and encourage domestic tourism into becoming a major contributor to the government’s tourism-related projects and programs.”