The Philippines are now one step closer to raising taxes on the Philippines Offshore Gambling Industry (POGOs). On November 18, the House Ways and Means committee approved Albay Representative Joey Salceda’s bill that would raise taxes on both POGO employees and revenues.
House Bill No. 5267, which would set a five percent franchise tax on the revenue POGOS and 25 percent on employee incomes, with a minimum threshold of P600,000 ($11,790) per year, passed the committee unanimously after Surigao del Sur Rep. Prospero Pichay Jr motioned for a vote.
House ways and means committee approves bill seeking to impose 5% franchise tax on POGOs and their service providers. | @DYGalvezINQ pic.twitter.com/Z2qeAdmmQb
— Inquirer (@inquirerdotnet) November 18, 2019
The bill, should it become a law, would raise taxes on POGOs who currently pay a 2% franchise tax to the Philippines Amusement and Gaming Corporation (PAGCOR). “This will raise P45 billion for the national government,” bill author Salceda said.
The bill mandates that PAGCOR should collect all taxes from the POGOs, which it would then turn over to the Bureau of Internal Revenue (BIR). It also demands that POGOs register with the BIR before they obtain their license to operate from the regulator.
The bill will now have to be sponsored on second reading in the House plenary before it progresses to the next steps.
This comes on the same day that confusion reigned supreme, as the Office of the Solicitor General (OSG) issued an opinion that POGO revenues could not be taxed. This caused a commotion that forced Senator Frank Drilon and the Department of Finance to both issue their own contrary opinions.
The pressure to tax the POGO industry, which has a very large imported Chinese work force, can partly be explained by the social and economic anxiety brought in by new immigrants with new money. A South China Morning Post article recently explored how Chinese workers are displacing Filipinos. The result has created a cause for ambitious politicians to champion in fighting the growing POGO influence in the country.
But as several influential decision have warned, like PAGCOR and Benjamin Diokno of the Central Bank of the Philippines, there’s a real threat that pressuring the POGO industry too much too soon will encourage businesses to leave, potentially leaving the Philippine economy in taters as the real estate market crashes and thousands of homegrown workers lose their jobs.
One way or another, it looks like more pressure is coming though. “It’s about P45-billion tax take. It’s not coffee money,” said Head of the National Economic and Development Authority Ernesto M. Pernia. “We have to tax POGOs.”