Philippine travel tax repeal nears vote amid funding gap

By Elena Vasquez

The Philippine travel tax raised 8.7 billion pesos ($136 million) in 2025, and the Senate is targeting year-end approval of its repeal bill after the House backed the measure on March 16.

The Travel Tax Abolition Act of 2026 would scrap the nearly 50-year-old levy of 1,620 pesos ($25) that Filipinos pay per outbound trip, or international travel from the Philippines. First-class travelers now pay 2,700 pesos ($42).

President Ferdinand Marcos Jr. has listed the bill among his priority measures. Lawmakers must reconcile both chambers’ versions before the president can sign a final bill.

What changes for travel sellers?

For Filipino travelers, repeal would remove a mandatory trip cost; for sellers of outbound travel, it could lower the price barrier to international purchases. No booking, arrivals or commission data in the proposal quantify that effect.

The Philippine Hotel Owners Association opposes the bill in its current form, arguing that repeal would push spending abroad while leaving domestic tourism projects short of money. The association frames that as a redistribution of demand away from domestic sellers, but the proposal offers no booking-share data to test its position.

Who bears the revenue loss?

Half of the 2025 collection, about 4.35 billion pesos ($68 million), went to the Tourism Infrastructure and Enterprise Zone Authority, or TIEZA.

The other 4.35 billion pesos funded higher education and arts and culture programs; the proposal does not show how that money divides between them. The proposed national budget contains no replacement funding for TIEZA.

Without replacement for the other allocations, the full 8.7 billion peso collection would face a funding gap. That exposure reaches infrastructure financing, education and cultural programs, rather than remaining confined to hotel development.

Can TIEZA absorb the loss?

TIEZA Chief Operating Officer Mark Lapid told lawmakers at a September budget hearing: “about 95% of the agency’s operations are at risk.” His figure is an agency warning about the proposed budget, not a measured shutdown rate.

The projects exposed include:

• Water and sewage work in El Nido, Coron and Baguio.
• Restoration of Baguio’s Burnham Park.
• Upgrades to 10 domestic airports.

Tourism Secretary Christina Frasco warned that “repeal without replacement funding could jeopardize infrastructure, education and heritage programs.” That is a policy warning, not a measured loss. The available budget-hearing details do not include project-level cash balances, contract schedules, occupancy series or operator filings.

Those omissions prevent a calculation of construction delays, lost bookings or seller revenue. For travel sellers, the commercial consequence is indirect: utilities, airport access and maintained public assets support the destinations and hotels they sell.

If TIEZA cannot finance that work, sellers face uncertainty over service quality and destination capacity. The proposal identifies no hotel closures, room cancellations or commission changes, so any market-wide revenue loss remains unmeasured.

Why is hotel investment still moving?

Leechiu Property Consultants said the tax debate has not significantly affected hotel investment decisions; roads and airports have. The statement identifies access as the immediate investment variable for developers and the sellers who market their future inventory.

The available account provides no transaction-level data to test how broadly developers share that conclusion. Boracay has 3,678 rooms across 14 projects in its hotel development pipeline, meaning planned projects rather than necessarily open inventory.

Baguio’s pipeline grew 78% in two years to 1,454 rooms after highway upgrades. Those counts establish momentum in planned supply, not realized demand, and the available figures provide no occupancy or booking performance for either market.

What must happen before repeal takes effect?

The Senate’s year-end target depends on chamber agreement and presidential signature. If lawmakers leave the bill without replacement revenue, Filipino travelers receive the full 1,620-peso standard-trip levy removal, while TIEZA and the education and cultural programs lose their 2025 funding base.

Sellers should watch the final text and budget. Those documents, not the House vote alone, will determine whether cheaper outbound travel arrives alongside financed domestic infrastructure or a visible service gap at key destinations.