Duterte, in about-face, wants POGOs back to augment pandemic war chest

MANILA, Philippines (Update 1, July 9, 2021 8:39 a.m.) — President Rodrigo Duterte 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, or POGOs, to operate again so long as they pay the right taxes.

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.

“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 maybe repugnant to some,” he added.

Duterte’s remarks was a stunning turnaround from his government’s previous policy that saw a massive crackdown on erring POGOs, which led to an exodus of operators. Data from Philippine Amusement & Gaming Corp. (PAGCOR), the gaming regulator, shows 31 out of 40 POGOs that are still in the country are allowed to resume operations as of May 17, down from the pre-pandemic count of 61 companies.

In POGOs, bets are made by players abroad through service providers based here in the Philippines. These providers install the IT systems necessary for the games to be held. The PAGCOR only collects licensing fees.

On top of license fees, the Bureau of Internal Revenue started slapping a 5% franchise tax on POGO local providers in 2017, a direct result of 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, after the bureau ordered POGOs to settle their unpaid taxes before they can resume operations as pandemic curbs were being relaxed.

With companies leaving the country amid the crackdown, 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 P2.88 trillion in revenues this year, all while a ballooning pandemic bill is projected to push up government spending to P4.74 trillion. The result is a record budget deficit, as a share of the economy, of 9.4%, which would be bridged mostly with borrowings. — Ian Nicolas Cigaral