HOUSE Committee on Ways and Means Chairman and Albay Representative Joey Sarte Salceda on Friday celebrated the recent Supreme Court (SC) decision which affirmed the validity of Republic Act (RA) No. 11590, or the POGO (Philippine Offshore Gaming Operator) Tax Law, which imposed taxes and other tax administration provisions on offshore gaming licensees, their employees, and their service providers.
Salceda was the principal author of the measure, which he called “the most brutal tax measure ever imposed on any sector of the Philippine economy.”
“With the recent Supreme Court decision, RA 11590, or the POGO Tax Law undoubtedly becomes part of the law of the land. This is the strictest, most brutal tax law ever imposed on any sector, and I am proud of our work on that law,” Salceda said.
“One very notable portion of the decision reads: ‘Before the enactment of RA No. 11590, there is no valid law which imposes taxes upon POGOs.’ It also asserted that the enactment of RA 11590 rendered the petitions moot,” Salceda said.
“The Supreme Court’s decision thus implicitly affirms the validity of the POGO Tax Law. It is one of the strictest and most regulating tax laws in the statute books, and now, the question of its constitutionality has been implicitly resolved. This is consistent with the Supreme Court’s general doctrine of preserving the power of Congress to determine tax policy as an exclusive power,” he said.
‘More revenues after enactment of law’
Citing numbers from the Bureau of Internal Revenue (BIR), Salceda explained that the tax law resulted in greater revenues, contrary to earlier statements from some lawmakers.
“From January to October 2021, prior to the implementation of RA 11590, we collected only 300 million per month in taxes from POGO. After the implementation, it jumped to 410 million monthly for the rest of 2021. By January 2022, it was up to 540 million for the month. So, that closes any question on whether the tax law worked. It worked,” she said.
Salceda also enumerated provisions where the law is stricter on POGOs than on any other sector.
“Allow me to reiterate this: RA 11590, which the Supreme Court has now affirmed, is the most brutal tax law, in terms of tax administration, in the country’s Tax Code. It presumes income for employees – so there is no escaping tax,” Salceda said.
“It requires independent audits of operations (not just accounts), which is not required of any other sector in the economy. It mandates ‘free and efficient exchange of information’ between enforcement agencies, including the Bureau of Immigration (BI), the Department of Labor and Employment (DOLE), the Bureau of Internal Revenue (BIR), the Securities and Exchange Commission (SEC), the Philippine Amusement and Gaming Corporation (Pagcor), and any special economic zone authority. So, we can enforce better and outside of agency silos,” he said.
“Mere non-payment of taxes, even without malice, blacklists the POGO employee from employment in the Philippines. It also requires offshore licensees to employ a “resident agent for the mere purpose of receiving summons, notices and other legal processes.” We don’t do that for any other type of corporation,” Salceda said.
“In other words, if you are a legal POGO operator, there is no escape from regulation or taxes,” he said.
‘Closing down the whole POGO sector causes more harm’
Salceda warned that closing down the whole industry will create an entire underground sector, causing more social harm.
“I need to know what social harm the legal and compliant POGOs have caused. Tell me. Because even the Pagcor (Philippine Amusement and Gaming Corporation) says that those associated with crime are not legal operators,” Salceda said.
“That is why we need to close down illegal POGOs and enforce the law. Legal POGOs already comply with the strictest tax provisions ever included in the Tax Code. If you close down the legal POGOs, you only incentivize the underground POGOs. That’s like closing down whole ecozones just because there is some smuggling in them,” she said.
“As I have emphasized over the week: enforce the law. Don’t burn down the whole house just to kill the rat. Especially when, judging from Pagcor itself, the rat seems to be outside the house anyway,” Salceda added.