The Philippine Amusement and Gaming Corporation (PAGCOR) and the Philippine Charity Sweepstakes Office (PCSO) are pushing for lower taxes on winnings.
The proposed new Passive Income and Financial Intermediary Taxation Act (PIFITA), currently under discussion by the Senate Committee on Ways and Means, aims to streamline the tax rate on passive income to a simplified 15 percent.
During its second public hearing, PCSO Chairman Junie Cua expressed the desire to halve the tax on lotto winnings, proposing a reduction from 20 percent to 10 percent. The rationale behind the move is to benefit economically disadvantaged bettors who constitute a significant portion of lotto participants. Cua remarked, “Most of those who buy Lotto tickets are poor. What they have left from their daily expenses, that’s what they use to bet.”
The PCSO is also pushing for a reduction in its documentary stamp tax (DST) obligations from 20 percent to 10 percent. Attorney Katrina Contacto, an executive assistant with the PCSO, highlighted that the charity fund, amounting to P18.3 billion ($324.6 million) last year, had 67 percent, or P12.2 billion ($216.4 million), allocated to the DST. The PCSO had initially attempted to transfer this cost to bettors in 2018, but the move resulted in a decline in ticket sales in the following year. Consequently, the agency decided to absorb the costs to maintain competitive ticket prices.
With the current DST allocation limiting the funds available for charitable programs, the PCSO foresees an additional P3 billion ($53.2 million) being allocated to its Medical Access Program if the proposed tax reduction is approved. This would boost the total funds available for the program to P4.9 billion ($86.9 million).
At the same hearing, PAGCOR Corporate Services Department Assistant Vice President Attorney Arnold Salvosa proposed that casino winnings be exempt from tax, considering them as a form of unexpected profit. Drawing comparisons with competitors in Asia, Salvosa highlighted that both Singapore and Macau do not impose taxes on casino winnings, treating them as windfalls rather than income. He also referred to the taxation system in the United States, where casino winnings are taxed as part of an individual’s income tax based on specific parameters related to their use as a business or income source.
