PAL cool on proposed hike in fuel excise tax

MANILA, Philippines - National carrier Philippine Airlines (PAL) is lukewarm to a proposal of the Department of Finance (DOF) to raise excise tax on fuel, citing it could lead to a weak demand for travel.

PAL president and chief operating officer Jaime Bautista said higher excise tax on jet fuel would mean more costs for the airline.

DOF’s first package to amend the National International Revenue Code submitted to the House of Representatives, seeks to lower personal income tax brackets.

To offset revenue losses, the first package proposes to raise excise taxes on oil and remove some value-added tax exemptions.

Airlines are seen to be affected by the first tax reform package as this includes increasing the excise tax on aviation turbo jet fuel to P10 from P3.67 per liter of volume capacity.

Bautista said excise taxes paid to the government would increase if the proposal is approved.

He said PAL pays P300 million to P500 million worth of excise taxes to the government per year.

Higher excise taxes could also result in higher ticket prices and in turn, deter Filipinos from travelling.

“If the price of tickets goes up, the appetite of travellers would be affected,” Bautista said.

“As the Philippine market is a very price sensitive market, it may affect the appetite of travellers to fly and travel,” he said.

DOF’s first tax reform package is currently pending approval in the ways and means committee of the House of Representatives.

Bautista said a position paper would be submitted with other airlines through the Air Carriers Association of the Philippines on the proposal.

For its part, Cebu Pacific said it is still reviewing the proposed tax reform package.