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The chairman of the House Media and Excise Committee said on Sunday that the government must ensure that Philippine Offshore Gaming Operators (POGO) pay off their existing tax obligations before allowing them to resume operations, even as he affirmed the claim of officials that the sector is necessary. A source of revenue for a government battered by the impact of the Covid-19 pandemic.
The chairman of the House of Representatives’ Ways and Means Committee, Joey Sarte Salceda, of Albay, said that allowing POGOs to resume operations “could be a source of income for health, if we apply the tax laws to the fullest.”
According to Salceda, the estimated tax obligations of the POGOs are now P42 billion.
Salceda said the monthly POGO tax collection could reach P2 billion if the POGO is allowed to resume.
“Of course, tax and regulatory agencies will have to make that guarantee that they can enforce. You can even use the question of whether POGOs should be allowed to reopen as an opportunity to collect tax obligations. We can make the granting of the permit to reopen conditional on the settlement of existing tax obligations, “said Salceda.
Salceda, lead author of a tax regime for POGOs that would generate up to P45 billion in his first year alone, said the POGOs could be a source of “much-needed testing and hospitalization funds for Covid-19, provided there is enough enforcement of tax laws and regulations. “
“China, the main market, is starting to recover from Covid-19, so there is definitely a resumption of demand. That is free money to finance medical care. But pagcor [Philippine Amusement and Gaming Corporation] and BIR must be diligent to get the fair share of government revenue, “he added.
“They also have to follow minimum health standards such as social distancing,” added Salceda.
He said that part of the public sentiment against the POGOs comes from the observation that the government is not getting its fair share of industry taxes.
“POGOs are not illegal under the law, so the whole discussion about whether they should be closed permanently, I think, is not the most immediate concern. The most immediate concern is how to get their income, “added Salceda.
“The Senate can adopt my committee reform when the session resumes if we want to increase POGO tax collection. In the meantime, let’s make them pay their responsibilities, and if they can meet the minimum health standards, we can consider reopening them, “said Salceda.
Salceda House of Representatives Bill No. 5267 would require POGOs to pay a 5 percent tax on gross income from their operations covered by the law that grants their franchise.
Foreign employees working for POGOs will also be expected to earn P600,000 and pay a 25 percent tax on their wages, salaries, annuities, compensation, remuneration, fees, and allowances.
“The question is not so much whether they should be allowed to reopen or not. At some point, they will be allowed, anyway, because they are not illegal. The question at stake is, if the promise is government revenue,” how do we get more out of the industry? “
Legislators’ objections
For his part, House minority leader Welcome Abante Jr. made plans to allow POGOs to operate in the country while dealing with the Covid-19 outbreak, categorizing the movement as “premature and reckless given our experience with this industry. “
“The reopening of the POGOs, according to Pagcor, depends on paying back taxes to the Internal Revenue Office and ensures that all of its 120,000 employees have work visas,” said the legislator.
“How can we trust them to meet these conditions when there is abundant evidence that these POGO operators have no qualms about evading our laws?”
Abante recalled that 44 Chinese citizens were recently arrested and detained after authorities raided an illegal POGO operation in the city of Parañaque, in direct violation of the improved community quarantine (ECQ) guidelines that prohibit non-essential business operations.
He cited irregularities in POGO operations that were exposed in congressional hearings, as BIR disclosures that POGOs have incurred P27 billion in tax obligations that remain uncollected.
The legislator appealed to the IATF for the Management of Emerging Infectious Diseases to reconsider its decisions, saying that POGOs cannot be considered business process outsourcing companies and should not be considered an “essential industry”.
Previously, Senate Minority Leader Franklin M. Drilon and Senator Risa Hontiveros protested the IATF decision on Pagcor’s request to allow POGOs to resume operations, including justification that POGOs are indeed business process outsourcing operations and therefore must be granted an exemption.
