The government should be collecting more taxes from the Philippine Amusement and Gaming Corp. (Pagcor), the state-owned operator of casinos and other gaming activities, the National Tax Research Center (NTRC) has recommended.
In a paper, the tax center said that the Department of Finance (DOF) should strictly define the gross revenue or earnings of Pagcor.
The gross revenue or earnings of the government-owned and controlled gaming agency is the basis for its five-percent franchise tax and the 50-percent share of the government from its operations.
These tax liabilities of Pagcor are stipulated under the various laws governing the state-owned corporation.
However, the NTRC said that at present, Pagcor computes the five-percent franchise tax and the 50- percent government share based only on winnings from table games and from slot machines of the 13 Casino Filipino branches that it operates.
This means that Pagcor’s share in the winnings of its licensees does not form part of the base.
At present, Pagcor has four licensed casinos – Fontana Casino in Pampanga, East Bay Casino in Rizal, Poro Point Casino in La Union and Fort Stotsenberg, also in Pampanga. Moreover, the NTRC said, the winnings from slot machines exclude those generated from slot machines that are still on demo runs which last generally for three months.
“Within the demo period, winnings from these units are lumped under ‘other income.’ For 2006, income from demo units at SM department stores amounted to P1.58 billion or 58 percent of the ‘other income’ account,” the NTRC said in its paper.
As such, the NTRC said that the government should require Pagcor to declare all its income and thus, remit a bigger amount of tax to the government.
NTRC noted that Pagcor’s operations have evolved, with bingo operations in its 13 Casino Filipino branches and through private bingo licensees.
“They are also engaged in Internet gaming, chipwashing operations and licensing of privately operated casinos. There is therefore an urgent need to evaluate and define the sources of income on which the franchise tax and the 50-percent government share are based,” NTRC said.
As an example, the NTRC cited that in 2006, Pagcor’s total income amounted to more than P24 billion.
However, the amount used as basis for remitting the five-percent franchise tax and the 50-percent government share was only P19.4 billion or about 80 percent of Pagcor’s total income, the NTRC said.