Bill seeks tax exemption for PCSO

In 2018, P16.7 billion of PCSO's income went to taxes while only P9 billion went to charity.

By Keith A. Calayag

A partylist lawmaker has filed a measure that seeks to exempt the Philippine Charity Sweepstakes Office (PCSO) from paying taxes.

During the recent hearing of the House committee on appropriations on the proposed P4.1 trillion national budget, PCSO General Manager Royina Garma said the agency could allot more budget for its charity programs if it would be exempted from paying taxes.

Garma said in 2018, P16.7 billion of PCSO’s income went to taxes while only P9 billion went to charity.

Ang Probinsiyano Partylist Rep. Alfred delos Santos stated that there is a need to rationalize the taxation of PCSO as present tax laws have imposed new and more onerous tax obligations upon the agency.

The author of House Bill (HB) 4073 said these laws caused the removal of the agency’s previous exemption from corporate income tax, such that it is now subject to 30 percent corporate income tax; subjected the winning of individual bettors from PCSO sweepstakes and lotto to 20 percent final tax and increased the documentary stamp tax on lotto and other numbers games from 10 to 20 percent.

This, he said, not only burden PCSO but also the thousands of indigent Filipinos who rely on the agency for financial aid.

The PCSO is the principal government agency mandated to generate funds for health assistance and medical services.

About a third of the agency’s net receipts are used in the charity fund which provides for health programs, medical assistance and services and the other charities of national character.

HB 4073 seeks to amend Republic Act (RA) 1169 or the PCSO charter, as amended by Section 86 of RA 10963 or the Tax Reform for Acceleration on Inclusion (TRAIN) Act, and RA 8424 or the Tax Reform Act of 1997, as amended by Section 5 of the TRAIN law.

The bill struck down the provision in Section 4 of RA 1169 which states that tickets for horse races shall bear a 12-centavo internal revenue stamp.

The provision that states that “from the total prize fund from the proceeds of the sale of tickets, there shall be deducted an amount equivalent to one and one-half per centum of such total prize fund, which will be paid to the Bureau of Internal Revenue,” was also taken down.

The following provision instead is inserted in Section 4: “The tickets in Lotto, Sweepstakes, and unauthorized numbers games conducted by the office, the sale of such tickets, and the receipts derived from such sales, shall not be subject to tax.”

“The winnings of individuals in the authorized numbers games conducted by the Office shall be exempt from income tax.”

Section 199 of RA 8424 is likewise amended to include “Lotto, Sweepstakes, and other authorized numbers game conducted by the PCSO” under the list of the documents and papers not subject to stamp tax.

The bill was referred to the House committee on ways and means last 28 August.

p: wjg