Senator wants POGO tax to fund COVID-19 response

Senate Minority Leader Franklin M. Drilon proposed to use the 5% franchise tax on Philippine Offshore Gaming Operators (POGO) to fund the government’s COVID-19 activities. 

“This is a significant amount that the government should be able to utilize. We must exert every effort to make these POGOs comply with our tax laws and settle their unpaid dues. This is nothing compared to the social problems their continued presence has brought to the country,” Drilon said in a statement Wednesday.

“The main justification for allowing the POGOs to stay in the country and even to operate ahead of other businesses during the enhanced community quarantine was to help fund the COVID-19 measures. My amendment will bring teeth to this policy,” he added.

“Our current fiscal situation is insufficient to fund the stimulus measures we are proposing under the proposed Bayanihan law. We need additional sources of funds to respond to the pandemic,” Drilon emphasized. 

Drilon’s amendment would earmark the 5% franchise tax for COVID-19 programs and activities as the country struggles for funds to help the economy recover from the effects of the pandemic.

The economic managers earlier told the Senate that the economy could only afford P130 billion more for COVID-19 activities, he noted.

Drilon said his amendment will mandate that the amounts derived from the 5% franchise tax on all gaming receipts/earnings or the agreed pre-determined minimum monthly revenues from gaming operations, whichever is higher, earned by offshore gaming licensees, including gaming operators, gaming agents, service providers and gaming support providers, will be used to fund the new Bayanihan law.

During the hearing conducted by the Committee on Labor in February of this year, BIR Commissioner Sixto Dy said that POGO licensees and operators are currently not paying franchise taxes to the BIR. In total, the POGOs’ unpaid taxes would amount to around P50 Billion.

“If POGOs pay this huge amount, it could go a long way in our effort to alleviate the plight of the poor heavily affected by the pandemic,” Drilon said.

Failure to settle their obligations, Drilon said he would also propose an amendment that directs the Bureau of Internal Revenue (BIR) to implement closure orders against delinquent POGOs.

“The Bureau of Internal Revenue shall implement closure orders against offshore gaming licensees, operators, agents, service providers and support providers who fail to pay the taxes due, and such entities shall cease to operate,” Drilon said.

The minority leader will also propose to include as a source of funding for the Bayanihan law income tax, value-added tax, and other applicable taxes on income from non-gaming operations earned by offshore licensees, operators, agents, service providers, and support providers.