The Philippine Charity Sweepstakes Office (PCSO) is actively exploring the possibility of amending its charter to exempt lotto winners from taxation. This initiative follows the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Act, which imposes a 20% tax on winnings exceeding ₱10,000 from various PCSO products, including lotto, keno, and Small Town Lottery. Notably, the TRAIN Act also eliminated the corporate tax exemption for the charity agency.

Changes in Taxation Under the TRAIN Act

Previously, under the National Internal Revenue Code (NIRC), lotto winnings and other prizes from the PCSO were tax-exempt. However, the recent tax reforms have left many lotto players feeling disappointed. Florante Solmerin, the PCSO’s deputy spokesperson, commented on the reactions from the public.

“Some patrons feel that ₱10,000 is too low a threshold for taxation, arguing that it’s not a substantial amount to warrant such a burden,” Solmerin explained. “However, larger winners typically do not seem to mind.” The PCSO is currently assessing the impact of the TRAIN law and aims to reach a consensus soon.

The Need for Legislative Change

In discussions with PCSO officials on Friday, Marivic Gaban from the Bureau of Internal Revenue highlighted the agency’s options. If the PCSO seeks to exempt prizes from the 20% tax, it must request Congress to amend the existing PCSO Charter, known as Republic Act No. 1169.

“We can no longer pursue amendments to the TRAIN law,” Solmerin stated. “The PCSO is considered a revenue collection body and is thus not exempt from its provisions. Amending our charter is currently our only option.” Concerns have been raised about the potential impact on sales due to the new tax; however, Solmerin noted, “So far, we haven’t observed a significant decline; sales are still increasing.”

Revenue Projections and Future Contributions

Regarding revenue projections, PCSO General Manager Alexander Balutan estimated that the agency’s monthly tax payments could rise from ₱500 million to as much as ₱1 billion under the TRAIN law. He indicated that total revenues for the PCSO could exceed ₱60 billion this year, potentially leading to even higher tax contributions.

Solmerin emphasized that the PCSO’s earnings could play a crucial role in funding the government’s “Build, Build, Build” infrastructure program.