JAN.

8, 2012 DATE

NR # 2642
REF. NO.

Solon seeks inquiry into end of operations of international carriers due to govts discriminatory taxation
A lawmaker has called on the House Committee on Ways and Means to inquire into the closing down of operations of international carriers in the country due to the alleged discriminatory taxation imposed on them by the Philippine government. Rep. Giorgidi Aggabao (4th District, Isabela) said the decision of these airline companies to stop operations in the country has devastating implications on the tourism industry, foreign investment prospects, and the ability of the government to handle commitments under international trade agreements. There is a need to open a House inquiry to determine the needed legislative measures to balance the government taxation imposed on foreign airlines here in the country, said Aggabao, a Senior Vice Chairman of the Committee on Ways and Means, who sought the inquiry through House Resolution 1949. He said the European Chamber of Commerce in the Philippines (ECCP), in a letter to President Aquino on July 11, 2011, said that those tax payments are discriminatory since they were imposed only on foreign airlines. Subsequently, the International Air Transport Association (IATA), which represents 230 airlines comprising 93 percent of scheduled international air traffic, warned the government that the heavy taxation it levies of foreign carriers could lead to the Philippine aviation industry being left behind by other Southeast Asian countries according to Aggabao. The IATA also asserted that these taxes are inconsistent with the principles of the World Trade Organization of which the country is a member of and with the resolution of the International Civil Aviation Organization to which the country is a signatory of because the aforementioned tax policies serve as investment barriers by the Philippines the most expensive investment destination for airlines in the Southeast Asian region, said Aggabao. He said even the Joint Foreign Chambers of the Philippines (JFC), composed of the chambers of the United States, Canada, Japan, Australia, New Zealand, Europe and South Korea, has questioned the existence of these heavy tax measures on international carriers because it hampers the growth of foreign trade and the arrival of tourist in the country. Aggabao said the soon-to-be cancelled Manila-Amsterdam route of Air FranceKLM represent the last direct flights between the Philippine and Europe.

JAN. 8, 2012 DATE

NR # 2642
REF. NO.

The last European international carrier operating here in the country, Air FranceKLM, said it would be phasing out all flights between Manila and Amsterdam in a few months time due to the same heavy taxes slapped on foreign airlines, he said. In the past years, he said European carriers Aeroflot, Alitalia, Air France and British Airways ceased operations in the country because of the alleged highly discriminatory taxation. Similarly, major international carriers like Egypt Air, Pakistan Airlines, and Vietnam Airlines also ceased operations in recent years because of the governments tax policies. Key international carriers such as US-based Delta Air Lines, Inc. and Japan Airlines Co. have already cut down their carrying capacity in the country due to the unsustainable cost base of operating in here, said Aggabao. On March 2008, Aggabao said Lufthansa, Germanys national airline, ended its Manila-Europe (Frankfurt) route because of the tax burden that they are experiencing in the country. (30) rbb