ECCP: More foreign carriers bound to leave Philippines

Other foreign airlines may soon take Air France-KLM’s move to leave the Philippines if the government continues to ignore their plea to rationalize the current airline tax regime.

European Chamber of Commerce vice president for external affairs Henry Schumacher said the country should strike a balance between generating revenues and attracting more investors into the country.

“The question is, ‘What does this government really want?’ We’ve been arguing for a long time that these taxes are discriminatory and have led to airlines leaving the country. The Philippines can actually make more money by bringing more airlines here,” he said in a telephone interview Monday.

Schumacher said foreign carriers like Air France-KLM, which would be scrapping its Manila-Amsterdam direct flights by April next year, could opt to make Bangkok or Hong Kong as their hubs. Governments in those territories, he said, did not charge excessive taxes to foreign carriers.

Foreign airlines that would choose to continue operating in the Philippines might end up reducing their flights to the country because of the tax issue, he added.

“The common carriers’ tax is one of the major issues here. It’s unique to the Philippines,” he said.

The Joint Foreign Chambers of the Philippines (JFC), of which ECCP was a member, had sent numerous appeals to Congress and the Office of the President to remove the common carriers’ tax and the gross Philippine billings tax.

“Continuation of these taxes risks losing some of the present international air services into the country, as well as deterring new ones, and departs from standard international practice,” the JFC said.

Instead of giving an answer, however, the Office of the President passed the letter on to the Department of Finance, which thumbed down this request.

In a memorandum to President Aquino, Finance Secretary Cesar Purisima said the airlines’ requests—coursed through the JFC—needed changes in tax laws and, as such, these should be directed to Congress.

Foreign carriers want Malacañang to certify as an urgent administrative measure a bill pending at the House of Representatives seeking the exemption of international air carriers from the payment of the 2.5-percent gross Philippine billing tax and the 3-percent common carriers’ tax.

Local carriers are not slapped with such taxes.

The Export Development Council and National Competitiveness Council also called for the scrapping of those taxes to encourage more foreign airlines to operate in the country.