What It Means
- The House has passed travel tax abolition and the Senate has not, even though Senate leadership targets passage before the end of the year.
- Abolition replaces a levy that funds TIEZA, CHED and NCCA with appropriations that DBM sets each year, and DBM’s only figure for TIEZA in 2027 is zero.
- TIEZA, CHED and NCCA programs, and the local governments and contractors on TIEZA projects, now depend on a budget cycle they did not face before.
- Under the House version, the collecting authority must refund prepaid tax for flights on or after effectivity, a cash demand that arrives as collections stop.
Travel tax abolition looks like a tax cut for outbound Filipinos. Structurally, it is a transfer of funding authority. The levy has paid for TIEZA, CHED and NCCA programs, and abolition puts all three on the annual appropriations cycle that DBM controls.
The House has passed its version, and the Senate has not. At the Senate finance subcommittee hearing on the Department of Tourism budget on September 28, TIEZA chief operating officer Mark Lapid said the agency is not against abolition but asked for a transition period. He said 94 to 95 percent of TIEZA’s operations come from the travel tax.
Travel Tax Abolition Is a Funding Swap, Not a Tax Cut
The standard travel tax is ₱1,620 per departing Filipino on economy class. Lapid said half of collections, about ₱4.03 billion, funds TIEZA projects, and the other half goes to CHED and NCCA.
| Recipient | Share of collections | What is exposed |
|---|---|---|
| TIEZA | About half (₱4.03 billion, per Lapid) | Tourism infrastructure projects and operations |
| CHED and NCCA | The other half, combined | Programs funded from their share |
The totals do not reconcile. A ₱4.03 billion half share implies about ₱8.06 billion in collections. TIEZA earlier projected ₱9 billion for this year, and Senate President Sherwin Gatchalian put the revenue loss from travel tax abolition at almost ₱6 billion. The order of magnitude is clear and the exact figure is not.
That split is the mechanism. TIEZA funds its work from its share of collections. Travel tax abolition removes the allocation along with the levy, and what replaces it is a line in the General Appropriations Act that DBM sets.
DBM Becomes the Gatekeeper for Tourism Funding
Lapid said TIEZA submitted its proposed 2027 budget to DBM in March because abolition was already pending. In June, DBM replied with a letter giving TIEZA zero allocation for 2027. Senate finance committee chair JV Ejercito raised concern that TIEZA could not continue its projects once the tax is abolished.
A zero line can be read two ways. It may reflect that TIEZA has never needed a subsidy while the levy existed. Or it may be the first number in a negotiation over what replaces it. Under either reading, travel tax abolition leaves DBM as the party that sets the next number, and the only number on record is zero.
The Transition Request Is a Bid for Continued Funding
Lapid said TIEZA does not oppose abolition and asked for an extension while no money exists to replace the levy. Read plainly, that is a request for either continued collections or an appropriation. Both put TIEZA in the position of asking the agency that holds the budget, which is weaker than collecting its own revenue.
The Senate Timeline Leaves TIEZA’s 2027 Funding Undecided
Gatchalian said on August 20 that the Senate wants to pass the House-approved bill before the end of the year. He listed it among the chamber’s tax reform priorities beside the general tax amnesty bill and the GINHAWA bill. As of early October, the Senate had not passed it, and the 2027 budget runs on its own track with TIEZA at zero.
Both outcomes carry exposure. If the Senate passes travel tax abolition in the last weeks of the year, effectivity arrives against a zero baseline. If the bill slips, TIEZA keeps collecting while its 2027 line stays at zero. The bill and the budget move on separate tracks, and neither waits for the other.
The Refund Provision Hits TIEZA as Revenue Stops
The House version of travel tax abolition requires the collecting authority to immediately refund previously paid travel tax for flights scheduled on or after the date of effectivity. It also directs TIEZA, working with DBM, to issue implementing rules within 60 days of approval, covering refunds and the shift to funding through the General Appropriations Act.
TIEZA collects the tax, so the refund obligation falls on it. Under the House text, revenue ends on effectivity, refunds begin on effectivity, and replacement funding has not been appropriated. No available figure sizes the refund bill, which depends on how many tickets were bought ahead of effectivity for later flights. The Senate has not passed its version, so the final text may differ.
CHED, NCCA and Local Projects Carry Exposure the Hearing Left Aside
Hearing coverage of travel tax abolition centers on TIEZA, but the levy also funds the other half of collections that goes to CHED and NCCA. No replacement appropriation for either agency has been publicly identified.
On the project side, BusinessMirror’s account of the hearing lists clean water projects in El Nido and Coron, the Burnham Park rehabilitation in Baguio City and airport terminal rehabilitation among the pipeline items affected. Local governments and contractors on those projects hold commitments paid from a source that abolition removes.
Outbound Filipino travelers pay for these projects today through the TIEZA share. Representative Madrona, quoted on the bill’s final House approval, argued that the Philippines became a regional outlier after other ASEAN members dropped travel levies. That is the case for abolition, and it stands on its own terms. It does not say who pays for what the levy funded. If general revenue pays, those projects compete with every other budget line. If no one pays, they stop.
Exposure Moves to Agencies and Contractors
Travel tax abolition ends a funding model in which outbound travelers paid for tourism infrastructure and agency programs before any budget hearing began. What replaces it is a negotiation, and the one figure on record for TIEZA in 2027 is zero. The agencies, local governments and contractors holding commitments paid by the levy carry the risk that the next number is smaller than the last. The Senate’s year-end target fixes no effectivity date, so that risk has no end date either.
More developments that reshape the operating environment in National Signal section of Hemos PH.
