House panel OKs bill imposing taxes on online sabong, other legal electronic betting activities

The House Committee on Ways and Means on Tuesday approved in principle the measure imposing new taxes on legal online sabong and other legally-operated electronic betting activities.

During its meeting, the panel approved House Bill 7919, principally authored by its chairperson, Joey Salceda, with the primary goal to make the industry of online sabong and other related games more transparent and accountable.

“The operations of online betting on sabong are authorized by local ordinances. Because of the digital shift, there are now electronic betting operations on such games. But the electronic aspect of it is a gray area, even though the airwaves is national property," Salceda said.

"Because of this ambiguity, we are unable to levy national taxes on these activities. By clarifying this gray area in my proposal, we hope to raise multiples more in revenues than the BIR (Bureau of Internal Revenue) collection from cockpits of P13.7 million in 2019,” he added.

Under Salceda's proposal, a tax regime will be imposed on “Offsite Betting Activities on Locally Licensed Games,” which exclude “games and activities specifically authorized by law to be performed by the government gaming authorities, such as the Philippine Amusement and Gaming Corporation (PAGCOR) and the Philippine Charity and Sweepstakes office (PCSO).”

The tax to be imposed amounts to 5% of the gross revenue derived from Offsite Betting Activities on Locally Licensed Games and should not be in lieu of taxes required by local government units as well as regulatory fees and charges imposed by government agencies.

In order to ensure transparency and accountability in these activities, the measure authorizes the BIR "to accredit and inspect totalizators and other gambling devices used in the collection, consolidation, and recording of wagers made in offsite betting activities on locally licensed games."

At the same time, the bill requires operators of the regulated gaming activities to specify “Offsite Betting Activities on Locally Licensed Games” in disclosures and documentations required by the BIR and other regulatory government agencies and instrumentalities to ensure that the government can monitor their operations.

“While the government seeks new revenue streams to fund its COVID-19 priorities, this bill responds to this government need by imposing new national government taxes on activities that already exist and will undoubtedly continue to exist as digital technologies grow more sophisticated, but are not being imposed such taxes," Salceda said.

"Unlike other tax proposals which may have adverse socioeconomic impacts and may dampen economic growth and recovery, this proposed regime will not impose taxes on any goods and services essential to the Filipino people,” he added.

Games and Amusement Board chair Abraham Mitra said that the industry of online sabong and other related games is worth about P50 billion a year, but local government units are still unable to collect revenues effectively from it

“Once a national internal revenue tax is imposed on the industry, on top of local taxes, LGUs will also have a share in the collections, consistent with the Mandanas ruling. So, everyone wins," Salceda said.

The House ways and means panel will identify a regulating authority regarding the offsite or online betting activities to be added to the proposal to properly implement it.

“The principle is simple. The industry used to be in a gray area. Now, we can shed light on it. The industry used to be untaxed. Now, we will tax it," Salceda said.

"And, as a non-essential economic activity, this proposal will be one of the few rare opportunities to create a painless revenue stream for our economic recovery,” he added. --KBK, GMA News