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Taxes on off-site betting, ‘sabong’ near approval (Sabong News)

Taxes on off-site betting, ‘sabong’ near approval
Author Jovee Marie de la Cruz
Date NOVEMBER 17 2020
THE imposition of new taxes on offsite betting on locally-licensed games, including electronic betting on cockfighting or “sabong,” nears fruition as lawmakers approved the measure for such on November 17. Albay Rep. Joey Sarte Salceda said the House Committee on Ways and Means has approved in principle House Bill 7919, which aims to provide the government an initial P1 billion in revenues. “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,” the lawmaker added. According to Games and Amusement Board (GAB) Chair Abraham K. Mitra, the industry is worth about P50 billion annually. However, local government units (LGUs) are yet unable to collect revenues effectively from the industry, Mitra said. “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. Under the bill, the tax shall be 5 percent of gross revenues derived from off-site betting activities on locally licensed games, and shall not be in lieu of taxes required by the LGUs and regulatory fees and charges imposed by government agencies. LGUs will still have full regulatory and revenue collecting powers over in-premise games and betting. Salceda also wants more transparency and regulation in the sector by empowering the Bureau of Internal Revenue (BIR) to accredit and inspect totalizators and other gambling devices used to verify tax assessments, while allowing the LGUs to maintain full authority to license the games under their jurisdiction, imposing whatever local taxes they want to. A totalizator is “a device showing the number and amount of bets staked on a race, to facilitate the division of the total among those backing the winner.” To establish transparency and accountability in these activities, the bill also empowers the BIR to verify tax assessments. It also requires relevant gaming operators to specify “off-site betting activities on locally licensed games” in disclosures and documentations required by the BIR and other regulatory government agencies and instrumentalities. This requirement will help ensure that the government can monitor the activities of such operators. “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. 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,” Salceda said. “The regulatory checks that this bill establishes will also provide the government with more tools to regulate and monitor these activities and verify tax assessments,” Salceda added. The lawmaker said his committee is set to identify a regulating authority with regard to offsite or online betting activities, to be added in the proposal in order to properly implement the measure, which will be further discussed in the committee’s hearings. He added that taxes on winnings are also being contemplated. “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. 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,” Salceda said.

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