Special purpose taxes

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January 30, 2026 | 12:00am

MANILA, Philippines — As if the burden of regular taxes on the middle class is not enough, there are also numerous special taxes that overtax the taxpayers.

The most visible is the travel tax, a special tax imposed on all Filipinos and long-term foreign residents when they leave the country. The full tax for an economy class passage is P1,620, and it is collected by the Tourism Infrastructure and Enterprise Zone Authority (TIEZA).

I recall that the travel tax was imposed during martial law in 1977. The first Marcos administration justified it to conserve foreign exchange by discouraging travel of ordinary citizens.

I remember having to get a government authority to buy as little as $300 and the amount allowed is stamped on your passport. That was so unfair in light of how Imelda and the Marcos cronies spent oodles of dollars in buying assets abroad and paying for lavish hotel and shopping bills.

The time has come to abolish that martial law-era imposition. We got nothing out of paying that tax. It just became another fund for our officials to plunder.

There is no source providing consolidated accounting of how much has been collected since martial law. But in recent years, they have been collecting about P7 to P7.8 billion a year.

The travel tax is supposedly to help put up needed tourism infrastructure. But TIEZA only gets 50 percent of the proceeds. The Commission on Higher Education gets 40 percent, and the National Commission for Culture and the Arts gets 10 percent. Why CHED gets anything from the tourism tax is unexplainable, a product of chop suey policymaking.

TIEZA and the Philippine Tourism Authority (PTA) before it, used the travel tax money as a source of pork barrel funds to make politicians happy. A former PTA chairman told me that he used the fund to build toilets and basketball courts, at the request of politicians, in areas that will never see a tourist in a hundred years.

Recent initiatives of the current tourism secretary include building Tourist Rest Areas that offer amenities like restrooms and tourist information. The problem is, like the toilets of PTA before, not all the supposedly tourist rest areas are really in tourist travel routes.

More defensible projects include putting up water supply and sewage systems in tourist areas like Boracay, Puerto Galera and San Vicente, Palawan. They should add Coron, El Nido and Siargao to the list.

TIEZA also claims spending for the rehabilitation of heritage and historical sites like the Malinta Tunnel in Corregidor. It also runs the Banaue Hotel and Youth Hostel in Ifugao and Mount Data Hotel in the Cordilleras. It also runs the Club Intramuros Golf Course in Manila which generates revenues.

TIEZA also develops Tourism Enterprise Zones that offer fiscal incentives to tourism-related enterprises including income tax holidays, gross income tax in lieu of national taxes and VAT and duty exemptions supposedly to encourage both domestic and foreign investments.

The hotels TIEZA runs are dependent on subsidies and should be privatized. Supporting some heritage sites and putting tourism infrastructure like water and sewage systems are TIEZA’s more important functions. How well TIEZA is performing those functions is another question altogether.

Making line-item allocations in the national budget is a more transparent budgeting approach for the useful functions of TIEZA. It also prevents TIEZA management from abusing its funds with the high overhead costs that many government agencies are famous for.

The other notorious special tax is what they call the road users tax. Its formal name is the Motor Vehicle User’s Charge (MVUC), a mandatory fee collected by the Land Transportation Office during annual vehicle registration.

Enacted under Republic Act 8794 in June 2000, the tax was designed to provide a steady revenue stream supposedly for the maintenance of national and provincial roads and improvement of road drainage. None of those we actually get, based on our experiences with potholed and flooded roads.

The tax is the government’s third-largest source of revenue after the Bureau of Internal Revenue and the Bureau of Customs.

There is no single updated figure for the total lifetime collection since 2001, but recorded milestones show its scale: From 2001 to 2014 it collected about P112.5 billion.

On an annual basis, collection was at P14.66 billion in 2018 alone. By 2024, annual collections were estimated at roughly P22.4 billion. Congress now wants to increase the rates supposedly to account for inflation, with a five percent increase from 2027 onwards.

The controversial Road Board — the body that managed the funds — was abolished in 2019 in reaction to widespread corruption and misuse of the “pork barrel” funds. Many politicians became rich from the fund before they discovered flood control projects.

Then there is the so-called sin tax. In 2024, total collections reached P303 billion.

It is supposed to be used exclusively to fund the Universal Health care program through PhilHealth. Yet, it was partly used by then Finance Secretary Ralph Recto under a mandate from Congress in that corruption-laden 2025 National Budget, to finance other things.

Let us not forget the Special Education Fund, a local tax of one percent on the assessed value of real property. The proceeds are entirely devoted to the special public education fund for the operation and maintenance of public schools, construction and repair of school buildings and procurement of books and school supplies at the local level.

Yet, after decades of collecting that tax and following the Constitutional mandate to give DepEd the highest budget allocation, we still don’t have enough schoolrooms and those we have need serious repair.

We are being over taxed but getting little benefits. The corrupt only get more funds to loot. There must be a better way.

Boo Chanco’s email address is [email protected]. Follow him on X @boochanco