MANILA — The Philippine Charity Sweepstakes Office (PCSO) and the Philippine Amusement and Gaming Corporation (PAGCOR) are seeking to reduce taxes on casino and lotto winnings.

Under the proposed Passive Income and Financial Intermediary Taxation Act (PIFITA) being tackled by the Senate Committee on Ways and Means, the tax rate on passive income will be simplified at 15 percent in hopes to increase compliance.

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In the second public hearing on the tax measure, PCSO Chairman Junie Cua said they wanted to halve the tax on lotto winnings to 10 percent from 20 percent for the benefit of poor bettors.

“’Yong mga tumataya kasi sa lotto, karamihan ay mahihirap. ‘Yong mga konting natira sa araw-araw yun ang pinantataya. We feel that the winners are mostly people who are needy and therefore baka pwedeng ibaba yung (maybe we can reduce the) tax on winnings,” Cua said.

(Most of those who buy lotto tickets are poor. What they have left from their daily expenses, that's what they use to bet.)

PCSO is also lobbying to cut its documentary stamp tax (DST) obligations to 10 percent from 20 percent.

Atty. Kat Contacto of PCSO said the charity fund last year reached P18.3 billion, but 67 percent or P12.2 billion went to DST.

Contacto recalled that the PCSO initially tried to pass on the cost to bettors in 2018.

The move, however, resulted in the decline of ticket sales in 2019.

“The bettors are very price sensitive. Eventually, ang ginawa po ni PCSO unti-unti pong tinanggal ang pagpasa sa bettors ng DST. Eventually, ‘yong agency po ang sumalo just to keep the attractiveness po ‘yong presyo ng ticket,” Contacto said.

(PCSO stopped passing on the cost of the DST to the bettors. The agency bore the costs to make ticket prices attractive.)

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With DST “eating up” the charity fund, only 11 percent or P2 billion was allocated to PCSO’s Medical Access Program that gives financial assistance for hospitalization and health-related issues in 2023.

For 2024, the agency estimates that P14 billion will be spent on DST and only P1.68 billion will be used for beneficiaries of the Medical Access Program.

But if the proposed tax reduction is approved, PCSO expects an additional P3 billion will be added to fund the program, giving it a total of P4.9 billion in funds.

“We appeal to the Senate to help us with this one because charity po ang reason for being ng PCSO and our income is practically the lifeblood in performing our mandate,” Contacto said.

Meanwhile, PAGCOR Corporate Services Department Assistant Vice President Atty. Arnold Salvosa suggested that casino winnings be tax exempt since they are a form of unexpected profit.

“Our nearest competitor in Asia – Singapore and Macau – in terms of casino winnings, do not impose any tax. They treat casino winnings as windfall and not as income,” Salvosa said.

Citing the taxation system of the United States, Salvosa said that casino winnings are taxed as part of an individual’s income tax based on parameters that indicate if it is used as a business or a source of income.

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