Taxes on plane tickets
Cebu Pacific is now famous as a budget airline, both for domestic and Asian destinations. It’s fare for Manila-Iloilo, for instance, is only P588 one-way, exclusive of taxes. And it’s the latter that makes plane tickets more expensive. Here’s how (units in Philippine pesos):
Budget Fare 588
Fuel & insurance surcharge 1,220
Sub-total 1,808
VAT 12% 217
Total 2,025
The application of VAT on fuel and insurance surcharge is anomalous because fuel prices are already slapped with at least 3 taxes: import tax (2%), excise tax (P5.60/liter for gasoline) and VAT (12%). Thus, slapping another round of VAT on fuel surcharge is like slapping a new 12% charge on top of the above 3 taxes. That is why plane passengers pay nearly 4x that of an airline’s original plane fare. If government is not greedy, it should have slapped the 12% VAT on the airline’s fare only.
Budget Fare 588
Fuel & insurance surcharge 1,220
Sub-total 1,808
VAT 12% 217
Total 2,025
The application of VAT on fuel and insurance surcharge is anomalous because fuel prices are already slapped with at least 3 taxes: import tax (2%), excise tax (P5.60/liter for gasoline) and VAT (12%). Thus, slapping another round of VAT on fuel surcharge is like slapping a new 12% charge on top of the above 3 taxes. That is why plane passengers pay nearly 4x that of an airline’s original plane fare. If government is not greedy, it should have slapped the 12% VAT on the airline’s fare only.
posted by Bienvenido Oplas Jr | 12:34 AM
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