SENATOR Aquilino Pimentel III on Monday strongly opposed Senate Bill No. 2415 which seeks to implement a value-added tax (VAT) refund mechanism for non-resident tourists.
Pimentel assailed the measure as “misguided” even as he recognized the value of tourism in the national economy,
Speaking at the plenary, Pimentel said SB 2415 “presents significant risks that far outweigh its projected benefits.”
The bill’s proponent asserted that the VAT refund scheme could lead to an average increase of about 148,000 tourist arrivals from 2024 to 2028, resulting in heightened tourist spending in the country.
Pimentel argued however, that these were mere projections that might be costly for the government.
The opposition senator pointed out the government stands to lose over P4 billion in tax refunds to the tourists over a five-year period.
He questioned the rationale of giving away P4 billion in revenues to foreigners while millions of Filipinos continue to suffer economic difficulties.
“Imagine the impact of P4 billion if used properly for our countrymen,” Pimentel stressed.
He suggested the amount could build 1,600 new classrooms, or 138 to 190 kilometers of concrete roads.
In terms of the Assistance to Individuals in Crisis Situation (AICS) program, P4 billion could support at least 400,000 college students, or 800,000 elementary or high school students in educational assistance, or provide cash relief assistance to at least 400,000 beneficiaries.””
“Better yet, why don’t we reduce taxes that directly benefit Filipinos,” he added.
Pimentel also said unless the government has installed a mechanism to track actual tourist spending and the corresponding VAT paid by them, SB 2415 would remain “fundamentally unfair” to the Filipino people.
He charged that bill lacked the assurance that it would genuinely boost the economy, or the proposed VAT refunds would be enjoyed exclusively by bona fide non-resident tourists.
“We also need to weigh the cost of implementing this refund system,” he added.
Pimentel said the Department of Finance will need to engage internationally recognized VAT refund operators.
“The question, then, is: how much more will we have to spend just to refund money to tourists? And is it worth it?” the senator inquired.
He brushed aside assertions that the VAT refund system could be implemented at no cost for the government.
“The truth is we have yet to determine just how much more we will need to spend to operationalize this mechanism,” Pimentel argued.
