Proposal to reduce tax on lotto winnings, tickets gets House panel nod

Published August 24, 2022, 4:22 PM

by Seth Cabanban

The House Committee on Ways and Means has approved a House bill (HB) that, among others, seeks to reduce the taxation on prize winnings, which includes winning lottery tickets.


Committee Chairman Albay 2nd district Rep. Joey Salceda presided over the panel hearing on Wednesday, Aug. 24. It was during the hearing that the panel approved a motion to consolidate HBs 375, 2111, and 3744.

Salceda authored HB 375, which ended up being the lead measure for the consolidation.

The measure, known as the Passive Income and Financial Intermediary Taxation Act (PITIFA), was approved on third and final reading during the previous 18th Congress.

It aims to redesign taxation of the financial sector by making it “simpler, fairer, and more efficient, critical to its role in the long-term growth and development of the economy”.

One of the provisions in the bill mandates the following for lottery winnings:

“Royalties, prizes, and other winnings – A final tax at the rate of twenty percent is hereby imposed on the following income derived from sources within the Philippines: (1) Royalties earned as passive income, expect royalties from books, as well as other literary works and musical compositions which shall be subject to a final tax of ten percent; (2) Prizes (except prizes amounting to P10,000 or less) which shall be subject to tax under Section 24 (A); and (3) Other winnings (except winnings amounting to P10,000 or less from Philippine Charity Sweepstakes [PCSO] And Lotto shall be exempt.”

Nueva Ecija 1st district Rep. Mikaela Suansing then moved to consider an amendment to provision (3) of the former, which reads:

“Other winnings: Provided, that winnings amounting to P10,000 or less from PCSO and lotto shall be exempt from tax; Provided, further that should the winnings exceed P10,000, the tax herein imposed shall be ten percent.”

The amendment makes it so that lottery winnings over P10,000 will be taxed only 10 percent while winnings under P10,000 will not be taxed.

Furthermore, Suansing also proposed that the documentary stamp tax (DST) imposed on the purchase of lottery tickets be reduced from 20 percent to 10 percent, with the collected funds to be used to support the government’s Universal Healthcare Program under Republic Act (RA) 11223 and other healthcare programs.

The amendments were proposed after it was leanred that the increased taxes on lottery tickets had reduced their sales by about 42 percent.

Salceda approved the proposed amendments to the consolidated bill, despite ACT-Teachers Rep. France Castro’s objection.