By Genalyn Kabiling and Hannah Torregoza
All tax revenues from offshore gaming operations should be used to bankroll the government’s response to the coronavirus outbreak, particularly the social amelioration program for affected sectors, Malacañang said on Monday.
The proposal was made by presidential spokesman Harry Roque in a bid to augment state resources to help people who lost their jobs as well as others severely hit by the quarantine restrictions.
The government recently allowed the partial reopening of Philippine Offshore Gaming Operators (POGOs), now considered under the business process outsourcing industry, subject to certain conditions. POGOs were among the gaming establishments previously prohibited during the Luzon-wide lockdown.
“Mayroon pang buwis na binabayaran ng mga POGOs. Ang latest figure na nakita ko is ₱22 billion sa 2 taon, so that means ₱1 billion a month. So sa akin naman, if we can get this ₱1.6 billion a month para sa COVID, sa darating na linggo makikita natin ‘yung mga pagkukulang na sa ating mga binigay na budget ng Kongreso para lalong-lalo na doon sa social amelioration program (POGOs pay taxes. The latest figure I saw is ₱22 billion in two months so that means around ₱1 billion a month. If we can get this ₱1.6 billion a month for COVID, we will see in the coming week the shortage in the budget given by Congress especially for the social amelioration program),” Roque said in a TV interview Monday.
“Ang aking mungkahi po at sana nga po ay matupad ito ay lahat po ng kita ng POGO mapunta, hindi lamang sa COVID-19, kundi lalong-lalo na doon sa social amelioration program na inaantay ng marami nating kababayan habang sila ay naghihirap dahil hindi nga makapagtrabaho dahil sa ECQ (enhanced community quarantine) (I propose that all POGO revenues will go not only to COVID-19, but especially to the social amelioration program for our countrymen who are suffering because they cannot work due to the ECQ),” Roque said.
These tax revenues from POGOs, according to Roque are on top of the ₱600 million in monthly regulatory fees being paid to the Philippine Amusement and Gaming Corporation (Pagcor). Such regulatory fees, he said, may also be used for the government’s coronavirus response.
As the quarantine regulations forced many companies to temporarily close or scale down their operations, the government recently launched various programs to help affected sectors. One of the programs is the ₱200-billion emergency subsidy program for 18 million low-income families for the months of April and May. Another five million households will be added to the list of target beneficiaries this month, according to authorities.
President Duterte earlier admitted govt funds are already running low but will find ways to boost resources, including borrowing money and selling state properties.
Malacañang has left to the discretion of lawmakers on whether or not to conduct a probe into the controversial resumption of POGO operations during the quarantine period. Roque, however, reminded the lawmakers about the government’s funding requirements for the aid program for people suffering amid the pandemic.
“It’s the duty, privilege, and call of the Senate if they want to investigate. But the question is, while there is no vaccine, no cure for COVID-19, where will we get the resources for the help needed by our countrymen who are unable to work because this is the only way to slow down the spread of the disease?,” he asked.
Roque also brushed aside the statement of a group of BPO companies that POGOs are not part of their industry.
He explained that the government is merely observing regulations on the operations of POGOs in the country when it allowed them to open. POGOs have an offshore nature of business since it caters to gamblers abroad, he said.
“It’s not for them to say that because we are following the definition of POGOs based on the guidelines from those giving tax incentives,” he said of the statement issued by the IT-Business Process Association of the Philippines.
“If you provide service for an activity outside the country, that’s BPO. It’s called outsource business processing. BPOs and service providers outsource IT, computer requirements for the online gambling abroad, in China, not in the Philippines,” he said.
Roque also said POGOs employ mostly Chinese nationals since Mandarin is used in their operations. He claimed not all Filipinos know Mandarin.
“(So why are there many foreign workers? Because they are BPOs. The language used in the computers is Chinese, Mandarin so no Filipino can do that job because we don’t know how to speak Mandarin,” he said.
Senate minority leader Franklin Drilon warned government against treating POGOs as part of the BPO industry, saying the Philippines will lose billions in franchise tax and license fee revenues, if it pursues such argument.
“To say that POGOs are part of our BPO industry is a dangerous argument. It has far-reaching implications that will put the government at a grave disadvantage,” Drilon said in a statement.
Drilon said that to treat POGOs as BPOs would be detrimental to the country’s efforts to collect franchise taxes that majority of the 60 licensed online gaming operators owe the government in 2019.
The law, Drilon stressed, is very clear that POGOs are part of the gaming industry, not the BPO industry. And to claim that POGOs are BPO companies is insulting to the industry that has fueled the country’s economy for decades, he said.
The senator said the POGOs can use the statement as a defense against paying the required five percent franchise tax the government has imposed.
“It will put at risk the license fees being collected by the Philippine Amusement and Gaming Corp. (Pagcor),” Drilon said.
“If POGOs are considered BPOs, then there would be no need to pay the franchise tax and the license fee, he pointed out.
Under the law, Drilon explained that the authority to operate and conduct games of chance is centralized in the Pagcor. Entities, including POGOs, can engage in the gambling business only upon grant of a license or franchise from the state gaming regulator and to do that, they must pay the franchise tax.
Drilon also said that Pagcor’s assertion that allowing POGOs to operate will help the government generate revenues to finance its efforts against the novel coronavirus or COVID-19 pandemic is “a very deceptive assertion.”
“It is the POGOs that owe the government billions of pesos in unpaid taxes. Bayaran muna nila yan (Let them pay that first),” Drilon asserted.
“If only these POGOs would pay their taxes, the amount would go a long way in our effort to alleviate the plight of the poor heavily affected by the crisis caused by COVID-19,” he pointed out.
Drilon urged the Duterte administration not to circumvent the law, saying they should not choose what law on the basis of whatever is convenient.
Pagcor had earlier announced that POGOs must meet certain conditions, such as the payment of taxes and
observance of health protocols, before being allowed to resume partial operations. The decision was made reportedly to help the government raise funds to contain the spread of the coronavirus disease.
“Pagcor allowed the reopening of POGO operations under Information and Communication TechnologyBusiness Process Outsourcing (ICTBPO) exemption. Businesses classified under ICT-BPO are those that are involved in non-primary business and functions, which will be allowed to operate under the existing community quarantine rule,” Pagcor said.
The conditions imposed on POGOs includes updating and settlement of tax liabilities as certified by the Bureau of Internal Revenue, updating payments for any regulatory fee, license fee, performance bond or penalties due to Pagcor, remittance of regulatory fees for the month of April, and must pass the readiness to implement safety protocols.
POGOs will also be required to operate only with 30 percent workforce per shift, provide shuttle services for employees, conduct temperature checks upon office entry, practice social distancing, proper sanitation and disinfection, as well as impose the wearing of mask at all times.
From 2016 to March, 2020, Pagcor has collected ₱20.83 billion from POGOs in regulatory and other related fees.