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Welcome remarks of TWG Lead Shepherd Javier Molina at the Conference on Enhancing Tourism Competitiveness in the APEC Region

TWG Lead Sheperd Molina

Welcome Remarks by

Javier Guillermo Molina

APEC TWG Lead Shepherd

Conference on Enhancing Tourism Competitiveness

 in the APEC Region Through Alignment of Tourism and Taxation Policies

Paradise Garden Resort, Boracay Island

19 May 2015

Good Morning everybody! Dear officials and friends, on behalf of the Tourism Working Group, I want to thank the Philippines for organizing this conference, and thank all of the speakers for your participation today.

Over the past years, there has been extraordinary growth in travel and tourism in the region. Just last year, the Americas grew 7%, the Asia Pacific grew 5%. The region is growing well above the average. All this producing more business, more jobs, more opportunities and a better life for the people in the APEC.

I’m very glad to join you today in this important conference, a milestone of one of our Tourism Working Group initiatives.

During the last two days we have reviewed progress on the different initiatives that we are working on: taxation policy, travel facilitation, MSMEs, Airline connectivity, Smart and secure traveler programs, travel friendly airports, among others. But certainly this initiative attracted a lot of interest among member economies since we started talking about this project in 2013.

Properly constituted taxes are certainly a necessary and legitimate fiscal tool for every economy, as they create a level playing field for private enterprises and the tourism sector should naturally contribute to it.

Like I mentioned at the beginning, tourism activity has been growing at higher rates than the economy in general, it is one of the most dynamic economic sectors; nevertheless, this should not be translated into an increase in taxes.

The sector has proven to be resilient and contributed to the recovery of many of our economies. Thus, fiscal policy makers should bear in mind not only the short term revenue, but the medium and long term impacts on its power to create economic growth and development while designing new taxes.

Heavy-handed, arbitrary taxes, levies, visa fees or airport fees can be counterproductive to the economy and sustainable tourism development, reducing visitors’ demand for these services, affecting the sector contribution to the GDPs, employment and MSME´s growth.

Certainly the impacts of fiscal policy vary from one economy to the other, depending on its price elasticity of the demand, but in any case it should be approached cautiously to ensure it maximizes the growth of domestic and international travel and tourism in the region and do not create hurdles to this activity.

Economies should strive to develop what the UNWTO has called “intelligent taxation” policies (as opposed to uninformed taxation). These policies maintain the efficiency of the fiscal system by adapting it to the changing environment and the volatile requirements. This will be possible by keeping taxes simple, fair and aimed at promoting stimulus and growth. Taxes that do not end up killing the goose that lays the golden eggs. Taxes that are correct.

And today, we will be discussing exactly this, how can taxation be healthy to the industry. We know that there is a price to be paid, but we have to find ways to make it so it pays back like any investment.

We welcome the Philippines leadership in this initiative as well as the engagement of other economies such as Chile, Indonesia, Korea and Peru and look forward to learn from its conclusions. We will benefit from the exchange of best practices and learn from successful experiences.

I wish you a successful meeting and a fruitful discussion.

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