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Governments worldwide could do more to help tourism industry by cutting taxes

Posted by on February 18th, 2022

The Philippines could do more to help its struggling tourism industry by cutting taxes /extending tax cuts.

Cuts to taxes on tourist related goods and services could help the Philippine tourism sector recover. The Philippine government could cut VAT and other taxes to attract visitors to the country when travel bans are lifted.

So far, only four countries worldwide have cut taxes to help their tourism industry. The UK, Ireland, China and Germany have been quick to make significant reductions to tourism taxes and the firm says other countries should consider following their example.

Our new study shows that Covid-driven cuts to tourism taxes have only reduced a tourist’s typical daily spend on tax by 1%, from 15% to 14%.

A tourist in the Philippines pays 13.7 % in taxes on a number of everyday purchases, including one night in a four-star hotel in a major tourist city (USD150), a meal for two in a restaurant (USD75) and a bottle of wine (USD30).

The tourism industry in the Philippines has been significantly impacted by the reduction in international travel this year. This has caused substantial knock-on effects for sectors including hotels, restaurants and visitor attractions.

There is scope for both central and local governments to cut taxes such a consumption, alcohol duty and city taxes to attract travelers when travel bans are finally lifted.