GGRAsia – POGO ban would leave Philippine tax shortfall: senator

POGO ban would leave Philippine tax shortfall: senator

Aug 07, 2023 Newsdesk Latest News, Philippines, Top of the deck

Senator Francis Escudero, leader of the Philippine Senate Committee on Finance, says that were there to be a total ban on the Philippine Offshore Gaming Operator (POGO) segment in the country’s licensed gaming market, then it might be necessary to hike taxes on other things, in order to cover an income shortfall.

“If we close them down, we may have to increase taxes because we need to cover the lost income from them. For this, I’d like to look at the big picture,” Mr Escudero was cited as saying by several local media outlets.

“Some are bad, but that doesn’t mean all are bad,” he stated regarding POGOs, adding that the government was earning revenue. Revenue at the country’s gaming and casino regulator, the Philippine Amusement and Gaming Corp (Pagcor) “increased by several hundred percent due to POGO,” he added.

It was reported in late June that the national government raked in just below PHP4.44 billion (US$80.1 million) from POGOs in the first eight months of 2022, compared to PHP3.91 billion in full-year 2021. The licensing of the segment was so the Phillippines could attract within its borders, online gaming operators wishing to serve customers outside that country.

But in June, the Philippine Finance Secretary, Benjamin Diokno, suggested the country should do away with POGOs, suggesting their continued presence posed reputational risk to the country and citing social costs of allowing them to remain.

Last year, members of the Senate’s Ways and Means Committee had criticised Pagcor for what they said was a lack of oversight regarding the operations of POGOs.

Senator Sherwin Gatchalian, in particular, has urged the prompt closure of POGOs. He has cited lack of benefit to the wider domestic economy, outstanding tax liabilities of some operators, and concerns about social harm from “criminal influence” associated with the trade.

But Senator Escudero said in his remarks reported at the weekend that calling for an outright ban on POGOs because some might be linked with antisocial activity was like calling for a ban on buses because some were associated with air pollution.

Several lobby groups with an economic interest in keeping POGOs, have made claims about the potential negative economic impact of closing the sector.

The Association of Service Providers and POGOs claimed that 23,000 Filipinos would lose their jobs if such businesses were banned.

Pagcor affirmed last week that all POGO licensees and service providers will have until September 17 to reapply for licences. An aim is to weed out what the authorities regard as some bad actors.

Senator Escudero described the review of POGO licensing as a “good start”. But he added that Pagcor should “coordinate with law-enforcement agencies… so that it knows what’s going on,” with regard to any new licences that might be issued.

Pagcor introduced a new regulatory framework for offshore gaming licensees with effect from July.

According to it, offshore operators are required to have an authorised capital stock of at least PHP100 million, of which PHP25 million should be paid up. Previously, the minimum capital was PHP15 million, of which PHP3 million had to be paid up.

Licences shall be valid for two years. There is also a PHP100,000 licence application fee, compared to varying fees previously.