Dominguez on raising funds vs COVID-19: Pogos maybe but alcoholic drinks no

Extended tax deadlines will delay revenues much needed for the fight against COVID-19, which could prompt the government to allow Philippine offshore gaming operators (Pogos) to resume operations, according to the country’s top economic manager.

Sought to comment on the push for Pogo resumption for revenue, Finance Secretary Carlos G. Dominguez III said “the evaluation is ongoing.”

“But let me reiterate—all of the above depend on the result of the ongoing evaluation of the trade-offs involved in the decision of maintaining the current partial lockdown or tightening it or loosening it further,” Dominguez said.

All businesses—including Pogos—had been temporarily shuttered amid the lockdown in Luzon and other parts of the country aimed at containing COVID-19.

The government had been running after errant Pogos that did not remit their foreign—mostly Chinese—workers’ withholding taxes and firms that did not pay corporate income and franchise taxes.

Last February, the Bureau of Internal Revenue (BIR) shuttered an allegedly tax-evading Pogo licensee after previously shutting down four Pogo service providers.

Pogo licensees tap service providers to be the ones that actually communicate with their clients—online gamblers outside the Philippines, mostly in China, which has strict anti-gambling laws.

As of early 2020, at least 60 Pogos had been issued licenses to operate by the state-run Philippine Amusement and Gaming Corp. (Pagcor), while 218 service providers employing over 108,000 foreigners had registered with the BIR.

The government had wanted to collect from Pogos P2 billion in taxes per month.

Last year, the government collected P6.42 billion in additional corporate and personal income taxes as it ran after alleged tax-deficient Pogos.

Dominguez said tax collections in April “will be very bad” partly due to the extended deadlines to file and pay several taxes in light of the lockdown extension until April 30.

At the weekend, the Department of Finance (DOF) said that the first-quarter tax collections of the BIR and Bureau of Customs not only declined but also slid below target as the COVID-19 pandemic and the resulting lockdowns imposed since mid-March hurt domestic businesses and external trade.

The country’s two largest revenue agencies collected P600.86 billion in taxes and import duties from January to March, down 1.7 percent from P611.03 billion in the same period last year.

The actual end-March joint BIR-BOC take was also 20.6-percent lower than the P757.12-billion goal for the three-month period.

On a proposal to lift national and local liquor bans as support measure for the COVID-19 lockdowns, Dominguez said: “I am not in favor.”

The Center for Alcohol Research and Development (Card) Foundation Inc., whose members included Absolut Distillers Inc., Emperador Distillers Inc. and Ginebra San Miguel Inc., made its appeal in an April 16 letter to Trade Secretary Ramon Lopez.

Card had proposed lifting the ban completely or relaxing it at certain hours during which stores could sell alcoholic drinks.

“If this ban continues, the industry can no longer survive,” Card said.

It said it would give rise to “a situation that can affect a large sector of the community.”

“The alcohol beverage industry bears already the agony of declining market demand due to the imposition of high excise taxes on alcohol,” Card had said.

Edited by TSB