By John Victor D. Ordoñez, Reporter
THE GOVERNMENT must work on improving the tourist experience at the country’s airports and immigration counters to develop the tourism industry, economists said, as the Senate debates a value-added tax (VAT) refund mechanism for visitors.
Foundation for Economic Freedom President Calixto V. Chikiamco said developing health facilities in tourist spots and doing away with cumbersome immigration processes will likely help the tourism industry grow more than tax rebates, since many visitors don’t come here to shop.
“Government would be better off focusing on improving tourism infrastructure and access,” he said via Viber.
“Improving tourists’ experience with our airports and immigration, making sure that there are health facilities in tourist spots, and visa waivers for certain nationalities would do more to improve tourism than giving tourists tax rebates on their purchases,” he said.
Senators have started floor debate on Senate Bill No. 2415, which aims provide non-resident tourists VAT refunds for purchases worth at least P3,000, to encourage more visitor spending.
The House of Representatives approved its version of the measure on third and final reading on March 6, 2023.
The Department of Tourism (DoT) is targeting 7.7 million international tourist arrivals this year.
As of Aug. 7, the Philippines has received 3.62 million inbound visitors, with 92% of them foreigners, the DoT said in statement on Aug. 8.
“It is important to align with the best practices of other neighboring countries or other countries around the world on the effective implementation of tax refunds or tax-free purchases for foreign tourists,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said via Viber.
Under the bill, the Secretary of Finance upon the recommendation of the Internal Revenue commissioner and the Tourism secretary, is authorized to adjust the P3,000 threshold based on inflation, administrative costs, and other market conditions.
Maria Eleanor L. Roque, tax principal of P&A Grant Thornton, said that if the bill is passed, the government must ensure only tourists avail of the refund and ensure the strict inspection of products bought.
“The VAT refund mechanism will encourage tourists to buy goods here in the Philippines because it can be cheaper to buy here compared to other countries with no refund mechanism,” she said via Viber message.
Roehlano M. Briones, a senior research fellow at the Philippine Institute for Development Studies, said the measure is unlikely to boost VAT collections.
“It will marginally boost tourist spending but not VAT collections,” he said via Viber.
Visitor spending was estimated at P323.68 billion in the first seven months, according to the DoT, exceeding the year-earlier total of P285.99 billion.
South Korea topped the list of visitor source countries with 960,809 arrivals, followed by the US with 590, 891.
