spot_img
28.1 C
Philippines
Friday, March 29, 2024

Gov’t, private sector stand to lose P100 billion a year with POGO shutdown

- Advertisement -

The Philippines stands to lose up to P100 billion a year if the government stops Philippine Offshore Gaming Operations, according to industry estimates.

The figure includes P25 billion in total taxes contributed by POGO establishments and their employees to the government and more than P70 billion in sales and revenues earned by various industries and service establishments from POGOs which employed as many as 120,000 individuals in 2020.

As the debate on whether POGOs should be allowed to continue in the Philippines hogs the limelight, the Supreme Court recently released a 2021 ruling that declares the government has no right to impose a 5-percent franchise tax on gross bets or turnovers made by POGOs.

The High Court, in a 42-page decision, declared Section 11(f) and (g) of the Bayanihan 2 Law unconstitutional, as these violate the “one subject, one title rule” of the Constitution.

The ruling promulgated on Dec. 7, 2021 and penned by Associate Justice Samuel Gaerlan but released only on Sept. 21, 2022 states that the “imposition of new taxes, camouflaged as part of a long list of existing taxes, cannot be contemplated as an integral part of a temporary COVID-19 relief measure.”

- Advertisement -

It also declared null and void Revenue Memorandum Circular 102-2017 and RMC 78-2018, “in so far as they impose franchise tax, income tax and other applicable taxes upon offshore-based POGO licensees.”

The ruling essentially implies that the government cannot slip in a tax measure in Bayanihan 2—a law that is intended to address the fallout from the COVID-19 pandemic.

The ruling, however, is not expected to have a major impact on revenues the government collects from POGOs, as there is a law––Republic Act 11590 or “An Act Taxing Philippine Offshore Gaming Operations”––that, according to legislators, already governs tax collections from the industry.

As Senate ways and means committee chair Sherwin Gatchalian said following the release of the SC decision, “this is moot and academic already as there is a new law … that governs the tax regime for POGOs.”

Senate finance committee chair Sonny Angara said the POGO tax provision in Bayanihan 2 “was already amended by the subsequent POGO tax law—that is RA 11590.”

The discussion brought to the fore the contribution of POGOs to government revenues and the economy.

House ways and means chair Rep. Joey Salceda, one of the authors of RA 11590, cited data from the Bureau of Internal Revenue showing that the government could earn up to P6 billion in 2022 from POGO operations.

Data from the BIR showed that revenues from POGO taxes prior to the implementation of RA 11590, from the period January to October 2021, reached P300 million a month.

The implementation of the law raised tax collection to P410 million monthly for the rest of 2021. By January 2022, taxes from POGOs hit P540 million each month. The figure if sustained could enable the country to earn up to P6.48 billion from POGO taxes this year, according to Salceda.

The amount does not include the income taxes the BIR collects from POGO employees, who are mandated by the law to pay a final withholding tax of 25 percent on gross income, provided that the minimum final withholding tax due monthly would not be lower than P12,500.

Data from the Philippine Amusement and Gaming Corp. showed there were 120,976 POGO workers in the country as of 2020.  Assuming, conservatively, that each of the foreign workers was paying P12,500 a month in income taxes, that would translate into P1,512,200,000 a month, or P18.14 billion a year.

Given these figures, the BIR could collect a minimum of P25 billion, on the conservative side, this year from POGO operations and their employees.

Such government revenues could fund crucial food security, transportation, social protection and health programs such as irrigation services (P29.5 billion); the Metro Manila Subway Project (P26.3 billion); social pensions for indigent seniors (P25.3 billion); and the purchase and allocations of drugs, medicines, and vaccines (P29.1 billion).

The financial impact of POGOs goes beyond government revenues. Leechiu Property Consultants estimated than on an annual basis, POGOs were spending P28.6 billion in housing rent on top of P18.9 billion for office rent.

Leechiu also estimates that POGO employees spend P11.4 billion for their meals and P9.5 billion for power annually, not to mention P952 million for their daily needs. These estimates would equate to about P70 billion in revenues for the private sector each year.

- Advertisement -

LATEST NEWS

Popular Articles