Philippine President Rodrigo Duterte, who has been against all gambling activities for several years has changed his views on the matter and wants online casinos to return in a bid to raise more funds for the cash-strapped government’s pandemic response.
In a televised speech on Wednesday, Duterte said Finance Secretary Carlos Dominguez III is “happy” with his plan to allow Philippine offshore gaming operators (POGO) to operate again so long as they pay the right taxes.
“Go ahead and gamble,” Duterte said, according to transcript released by his office late Wednesday, Bloomberg reports. “Now that we need money, the most sensible thing is really just to encourage those activities.”
The president also said he wants more casinos to open and cater to punters, believing that gambling activities would generate more revenues for the government through taxes. He said casinos as well as online gaming operators catering mostly to Chinese clients should pay the correct taxes.
“Now, why did I allow gambling? It’s because we don’t have money,” the president said. “The most sensible thing is really just to encourage those activities (gambling), though it may sound not really repulsive but may be repugnant to some,” he added, reports Philstar.
Duterte’s remarks were a turnaround from his government’s previous policy that saw a massive crackdown on POGOs believed to be not paying the right taxes, which led to an exodus of operators.
In POGOs, bets are made by players abroad through service providers based in the Philippines. These providers install the IT systems necessary for the games to be held. The Philippine Amusement & Gaming Corp. (PAGCOR) only collects licensing fees.
On top of license fees, the Bureau of Internal Revenue (BIR) started slapping a 5% franchise tax on POGO local providers in 2017, a direct result of a public clamor to tighten watch on offshore gaming believed to be populated by illegal Chinese workers. Income taxes were also charged on POGO workers, and some firms were shuttered due to alleged failure to pay taxes.
In 2020, the BIR collected P7.18 billion in taxes from POGOs, up 11.71% year-on-year. This was after the bureau ordered POGOs to settle their unpaid taxes before they can resume operations as pandemic curbs were being relaxed.
Data from PAGCOR shows 31 out of 40 POGOs that are still in the country were allowed to resume operations as of May 17, down from the pre-pandemic count of 61 companies. That said, the BIR forecast a 50% annual drop in tax haul from POGOs this year.
As prolonged lockdowns continue to sap tax collections, the government is expecting to raise PHP$2.88 trillion (USD $57.41) dollars in revenues this year, all while a ballooning pandemic bill is projected to push up government spending to P$4.74 trillion (USD $94.45 billion). The result is a record budget deficit, as a share of the economy, of 9.4%, which would be bridged mostly with borrowings.