PCSO seeks reduction of documentary stamp tax to address agency’s dilemma

Philippine Charity Sweepstales Office chair Junie Cua. FILE PHOTO

MANILA, Philippines — The Philippine Charity Sweepstakes Office (PCSO) is asking Congress to reduce the documentary stamp tax imposed on the agency’s transactions amid projections that its tax dues would reach P11 billion, which is paralyzing the agency.

During the deliberation of PCSO’s proposed budget for 2023 before the House of Representatives committee on appropriations on Tuesday, PCSO Chairperson Junie Cua asked Congress to reduce the documentary stamp tax (DST) to just five percent from the current 20 percent so that it can perform its mandate.

With the projected P11 billion DST dues, Cua said PCSO’s charity fund would only be around P1 billion.

“Well as I have explained in my presentation, the documentary stamp tax really has in a way of speaking, to exaggerate, has practically paralyzed the agency because this documentary stamp tax as of the latest count, as of the latest estimate, would reach up to about P11 billion, so leaving only less than a billion for our charity fund,” Cua told the committee.

“So I hope that this dilemma can really be addressed soon enough by Congress, and we would also like to ask the support of Congresswoman (Gerville) Luistro on that point.  So the documentary stamp tax challenge is really ‘real’ as far as we are concerned,” he added.

Currently, a 20-percent DST is imposed due to the Tax Reform for Acceleration and Inclusion (TRAIN) law, which was enacted in 2017.  Before the TRAIN law’s imposition, the DST was at 10 percent only.

But Cua said that the DST imposed on PCSO’s documentary transactions should even go down to five percent —  at par with Philippine Amusement and Gaming Corporation (Pagcor).

This is because, Cua explained, PCSO has a mandate to support the national government’s health programs, which Pagcor does not need to comply with.

“In fact, we would like to seek the support of Congress to reduce it to 5 percent, so that we would be at par with the tax levied on Pagcor,” the PCSO chairperson said.

“Pagcor is levied at only 5 percent, and yet it does not have the mandate that is required of us, we are supposed to use our funds to support medical assistance programs of the national government while Pagcor does not have that kind of a mandate.  So that’s it, madam chairperson,” Cua told appropriations committee vice chair and Marikina 2nd District Rep. Stella Quimbo.

Cua’s presentation during the hearing showed that the total ticket sales of the PCSO have started to recover from the slump caused by the COVID-19 pandemic, going up from just P18.62 billion in 2020 to P43.36 billion in 2021, and P25.92 billion in just the first six months of 2022.

The agency is targeting P46.1 billion revenues for the whole 2022.

However, despite the revenues going up for 2021 and 2022, PCSO’s funds for charity programs have decreased, going down from P9.206 billion in 2018 to P3.274 billion in 2021, and P2.268 billion in 2022.

Meanwhile, the DST has increased steadily, from P5.476 billion in 2020, P7.807 billion in 2021, and P9.171 billion in 2022 — a figure which Cua, as he said earlier, is projected to rise to as much as P11 billion for the entire year.

When subtracted against the 30 percent charity fund for 2022 which is at P13.49 billion, the PCSO would only have P4.319 billion, which may go even lower if the P11 billion DST projection is reached.

In response to Cua’s request, several lawmakers including Luistro vowed to bring the concerns to the committee on ways and means — the House panel assigned to tackle taxation issues.

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