Philippine Senator Proposes Use of Gaming Funds to Offset Tax Cuts

MANILA --  According to one lawmaker here, revenues from state-run gaming firms can be used to shoulder a proposed tax cut which would help ease the lives of Filipinos currently facing a seeming continuous increase in prices of basic goods, services, and oil and petroleum products.

Sen. Recto. Photo from the PHL Senate website

Senator Ralph Recto, who heads the Senate Ways and Means Committee in charge of reviewing tax bills, is considering using funds from the revenues of the Philippine Amusement Gaming Corporation (PAGCOR) and the Philippine Charity and Sweepstakes Office (PCSO) to augment government resources should the prevailing 12% value-added tax (VAT) be lowered to 10%.

The lawmaker from the province of Batangas also suggested adding in the government's share in the Malampaya gas project.

According to Recto:

"Lost revenues from VAT reduction should be replenished with funds from the Philippine Amusement Gaming Corporation, Philippine Charity and Sweepstakes Office, and the Malampaya gas project."

He added that revenue streams from PAGCOR and PCSO, as well as that from the gas-to-power consortium project are not reflected in the annual national budget. Senator Recto filed Senate Bill 2878 last year seeking to reduce VAT from 12% to 10%.

It will be noted that Recto also authored the bill that created the then-called Expanded Variable Added Tax or EVAT in 2007 now commonly referred to Filipinos as VAT. However, the lawmaker said that it was high-time that the 12% VAT be lowered as he believes that "the prescription for the 12% VAT as an economic medicine has expired."

While the proposed bill does not contain a provision on where government can get funding for lost revenues as a result of the measure, Recto however noted that PAGCOR and PCSO revenues, and the Malampaya royalties be considered in the annual budget. He added that funds from the three channels will be sufficient to offset lost revenues.

The Philippine government of President Benigno Aquino III however has told media recently that reducing the VAT is not an option. Revenues from the VAT collection are used in the government's social welfare programs.