A few months after assuming the post, Finance Secretary Benjamin Diokno said he was in favor of shutting down the Philippine Offshore Gaming Operators or POGOs following reports not only of kidnappings of workers, but also non-payment of taxes and other irregularities.
The Finance department, apparently after weighing the pros and cons of the issue, has changed its tune and now wants to keep the POGOs.
During a recent hearing of the House of Representatives committee on labor and employment, the DOF maintained that while total collections from POGOs have declined over the past years, it now prefers to keep them as the country stands to lose about P65 billion in taxes and other licenses if they pack up and leave.
That estimate of losses from the proposed shutdown of POGOs is about 0.3 percent of our GDP. The country’s nominal GDP last year stood at P19.187 trillion.
The bulk of almost 40 percent of the P64.61 billion in losses will come from housing space rentals income at P25.17 billion.
Another P16.63 billion from office space rentals will be lost. Some P6.56 billion will be dropped from personal consumption of POGO employees and another P3.5 billion from revenues of the Philippine Amusement and Gaming Corp. (PAGCOR).
The government is also expected to lose P3.43 billion from the value-added taxes of housing space rentals and P3.09 billion from transportation.
There’s more. Other losses will result from personal income taxes of POGO employees (P2.74 billion), VAT from office space rentals (P2.27 billion), other taxes (P830 million), corporate income tax (P340 million) and insurance (P50 million).
And that’s not all. Concerns over POGO-related crimes can also have detrimental effects on the country’s foreign direct investments, since one crime incidence in every 100,000 population can result in a GDP decline of one percent.
The estimated potential losses with respect to FDIs for the Philippines will range from P16.7 billion to P26.2 billion.
The DOF also cited the additional cost that the government will incur for law enforcers to provide security and deter crimes in areas where POGOs operate.
Given all this, it’s not surprising at all that POGOs may yet stay around for years to come, particularly since the government has incurred a huge foreign debt as part of its COVID-19 response from 2020 to the present.
The country needs the revenues that come from POGO operations for infrastructure development and delivery of social services.
What’s important is that government should strictly regulate them and keep them from straying from the law.