Gatchalian says POGOs contribute 1% to Philippines’ GDP

Senator Sherwin Gatchalian on Tuesday said Philippine Offshore Gaming Operators (POGOs) directly and indirectly contribute 1% to the country’s gross domestic product (GDP) amid calls for the total ban of the sector.

Citing his office's estimates, Gatchalian—who chairs the Senate Committee on Ways and Means—said POGOs contribute a total of P34.68 billion directly and indirectly to the Philippine economy in the form of tax and non-taxes.

The amount, according to the senator, includes P10.188 billion in real estate taxes, P7.465 billion in taxes on retail stores selling household items, communications devices and other goods, and P7.260 billion representing the sector’s 5% franchise tax.

The POGOs contribution also includes P3.07 billion in 25% withholding tax for foreign nationals, P1.78 billion in value-added tax (VAT), P1.683 billion in tax on food service activities, P1.58 billion in remittances to national government, P1.41 billion in foregone tax on utilities, P232 million in corporate income tax, and P4.312 million in income tax.

“This [presentation] is based on our own simulation. Would 1% GDP contribution warrant the continued existence of POGOs? Assuming the worst case, will that impact our economy? Would 1% be a significant negative effect on the economy?” Gatchalian asked.

In response, Finance Undersecretary Bayani Agabin said the 1% effect on GDP is “quite big and a cause for concern.”

However, the Finance official said that the Philippines can recover the potential losses should the country do away with offshore gaming operators. 

Finance Secretary Benjamin Diokno last month said the country should do away with POGOs, citing “social” and “reputational” risks.

With the POGO sector hounded by concerns regarding criminality given cases of trafficking and kidnapping, Agabin said, it may not be worth the revenues the country generates from the industry.

Gatchalian then asked where the government would source the P34.68 billion that would be lost if POGOs were shut down.

Agabin said the country is looking at tapping other foreign industries to invest in the country to offset the potential losses should POGOs completely exit the country.

Among the industries being looked at are healthcare, manufacturing, mass housing, infrastructure, environment, energy, and exports, along with green ecosystems and defense.

The Association of Service Providers and POGOs (ASPAP) earlier warned that some 23,000 Filipinos would lose their jobs if POGOs are banned from the country. — BM, GMA News