PCSO: STL operators owe P2.9B in taxes

THE PHILIPPINE Charity Sweepstakes Office (PCSO) on Monday admitted that Small Town Lottery (STL) operators have not paid P2.9 billion in taxes after nearly a decade in business.

PCSO General Manager Jose Ferdinand M. Rojas told members of the House committee on games and amusement that failure to collect the 10-percent documentary stamp tax from STL operators was one of the lapses uncovered during a PCSO review of STL operations from 2006 to 2015.

“But we will rectify this oversight. We will confer with the [Bureau of Internal Revenue],” Rojas said in an interview after the hearing.

A BIR representative confirmed that the STL operators had not paid a single centavo in documentary stamp tax since the STL was established in 2006 to stamp out the numbers racket “jueteng.”

The BIR won a Supreme Court ruling in 2008 that the STL is covered by a National Internal Revenue Code provision that imposes a 10-centavo documentary stamp tax for every P1 bet in jai alai, horse race, lotto, or other authorized numbers games. But the PCSO ignored the ruling.

Conrado Zabella, PCSO assistant general manager of gaming, told lawmakers that the tax was not collected because the STL was still in an “experimental phase.”

His statement drew a howl of disbelief from lawmakers who held that the STL had long passed the experimental stage.

Cavite Rep. Elpidio Barzaga Jr., the committee chair, said that the P29 billion in revenues reported by STL operators from 2006 to 2015 meant they were liable for at least P2.9 billion in back taxes, excluding penalties and fees.

“I believe PCSO officials should also be penalized for gross negligence. Even if it’s experimental, it does not excuse them from paying [the documentary stamp tax]. They can’t invoke ignorance of the law because everybody else would do the same,” Barzaga said.

Aside from nonpayment of the tax, Barzaga also questioned how much the STL operators were actually giving out from the prize funds allocated from their revenues.

No COA audit

The Commission on Audit (COA) told lawmakers that the STL operations had not been audited. But Rojas claimed the COA regional offices were auditing STL in the provinces, not in the PCSO main office in Manila.

Barzaga said that without a COA audit, there was no way to check whether the P29 billion in revenues from 2006 to 2015 reported by the STL operators was accurate.

With jueteng estimated to be worth more than P103 billion, Barzaga said, it is possible the STL is generating more revenue than what the operators have reported and that could have been reflected if only the PCSO had been strict about the use of official STL tickets

Earlier this month, PCSO Chair Erineo Maliksi said STL operators in recent years declared only P4.7 billion in revenue when the estimated income from the game was P50 billion a year.

Maliksi asked the National Bureau of Investigation to look into STL operations following reports that operators were using their licenses as cover for jueteng.

Reduced shares

House committee members also questioned the decision of the PCSO management to reduce the share of politicians and police officers, dubbed “charity funds,” from STL operators.

The share of governors was slashed from 4.5 percent in 2005 to 1.5 percent in 2015 under the new implementation rules set by the new management.

The share of town mayors was reduced from 9 percent in 2005 to 7 percent in 2015; that of House members was cut from 2.25 percent in 2005 to 1 percent in 2015; and that of the police was reduced from 4.5 percent in 2005 to 3 percent in 2015.

Rojas said the cut was meant to increase the share of STL operators from 5 percent to 20 percent to cover the salaries of thousands of cabos, cobradors and agents, and make the STL competitive with illegal numbers rackets.

He said a rise in the cut of STL operators would increase revenues by three to four times.

Caloocan Rep. Edgar Erice said the PCSO had experimented long enough with the STL and it was about time an assessment was made to determine whether it had achieved its goal of stamping out jueteng and other illegal numbers games.

Cover for jueteng

Sorsogon Rep. Deogracias Ramos claimed that his district was getting from STL operators only P50,000 a month, much lower than what it got in past years.

“The STL is the umbrella of jueteng in the country,” Ramos said.