A looming decision by lawmakers threatens to unravel the progress of domestic tourism: the potential abolition of the travel tax. While intended to ease the financial burden on outbound travelers, analysts warn that eliminating this revenue stream without a clear replacement could cripple vital infrastructure projects.
The travel tax, currently levied at P1,620 for economy and P2,700 for first-class passengers, has historically been a cornerstone of tourism funding. A staggering 90% of the Tourism Infrastructure and Enterprise Zone Authority’s (TIEZA) budget relies on these funds, fueling crucial airport upgrades, improved inter-island connectivity, and the development of access roads.
Experts emphasize that simply removing the tax isn’t enough. Dino Mari Palanca, director for marketing and research at Savills Philippines, stresses the need for proactive measures. “Establishing alternative mechanisms – public-private partnerships or dedicated budget allocations – is critical to ensure ongoing development isn’t delayed.”
The origins of the tax itself are rooted in a different era. Originally authorized by Presidential Decree during a time of foreign exchange scarcity, some now view it as outdated. Tax principal Eleanor Roque argues that in today’s world, global travel is no longer a luxury, rendering the tax inconsistent with modern realities.
Currently, half of the collected travel tax revenue goes to TIEZA, while 40% supports tourism-related education programs through the Commission on Higher Education (CHED), and the remaining 10% funds the National Commission for Culture and the Arts. This carefully balanced allocation faces disruption.
Concerns aren’t limited to funding gaps. Recent scandals, like the 2025 flood control controversy, highlight a deeper issue: the potential for misallocation of existing funds. Joey Bondoc, Director and Head of Research at Colliers Philippines, points out that the country isn’t necessarily lacking resources, but rather struggling with proper distribution.
The financial implications are significant. Finance Secretary Frederick Go estimates the government could lose approximately P8 billion annually if the travel tax is abolished, a figure confirmed by the P8.7 billion collected in 2025 alone. This loss demands careful consideration.
Despite the risks, analysts believe a strategic approach could yield positive results. Removing the tax, *combined* with targeted investments in tourism infrastructure, could stimulate domestic travel by increasing disposable income for travelers. Hotels, restaurants, and retailers stand to benefit from this increased spending.
Ultimately, the success of abolishing the travel tax hinges on a commitment to sustained infrastructure investment and enhanced destination competitiveness. Increased affordability, coupled with improvements to regional airports and emerging leisure destinations, could unlock a new era of growth for the Philippine tourism industry.
