The state-run Philippine Charity Sweepstakes Office (PCSO) has called on Congress to lower the current 20% Documentary Stamp Tax (DST) rate imposed on the purchase of lotto tickets to just 5% , lamenting that the high tax rate has reduced their funds available for their Medical Assistance Program (MAP).
During a House Appropriations Committee briefing on the proposed 2023 national budget, PCSO Chairman and former Representative Junie E. Cua said the imposition of the DST tax rate on lottery tickets “dramatically reduced” the funds available for MAP, the PCSO’s flagship product. charity program.
Following the enactment of the Tax Reform for Acceleration and Inclusion (Train) Act (Republic Act 10963) in December 2017, the rate of DST was doubled from 0.10 pula per ticket from lotto to 0.20 pula.
In his presentation, Cua said that his budget for MAP had dropped from 8.6 billion pesos in 2018 to 2.1 billion pesos in 2021 due to the 20% summer time rate. Similarly, the number of MAP beneficiaries in 2018 increased from 528,190 individuals in 2018 to 272,130 individuals in 2021.
For the first half of this year, the PCSO’s budget for MAP was 850 million pula, benefiting only 110,403 people.
“In fact, we would like to ask for support from Congress to reduce it to 5% so that we are on par with the tax levied on Pagcor [Philippine Amusement and Gaming Corp.]; The Pagcor is levied only 5%. And yet he does not have the mandate that is asked of us,” Cua said. “We are supposed to use our funds to support the medical assistance program with the national government when Pagcor doesn’t have that kind of mandate.”
Based on their latest estimates, Cua said they expect their net charitable fund to reach 16.4 billion pesos next year. However, the bulk of which (9P11.15 billion) will go to the 20% DST while their MAP will only get P1.39 billion. The remaining balance of the projected net charitable fund will go towards their compulsory contributions (2.36 billion pesos), the share of the charity fund of the small towns lottery (982.7 million pesos) and the rental of equipment (499.7 million pesos).
Last week, the House Ways and Means Committee already approved for plenary approval the Taxation of Passive Income and Financial Intermediaries (Pifita) or Package 4 of the Comprehensive Tax Reform Program (CTRP), which included a provision on reducing the DST rate from P0.20 to P0.10.
For the first half of this year, Cua also reported that its ticket sales reached 25.92 billion pesos, up 32.15% from 19.61 billion pesos a year ago, thanks to the full reopening of the economy.
The PCSO aims to reach 46.1 billion pesos in ticket sales this year and 55.78 billion pesos next year.
To further enhance revenue generation, Cua said it plans to commercialize the operation of a customized PCSO lottery system for five years, digitally selling and marketing PCSO lotteries using mobile phones and personal computing devices and the development and testing of new entertaining games using digital platforms.