‘We need them’?

Administration partisans loudly braying for ABS-CBN’s shutdown for its alleged unpaid taxes—which the network has denied, and which the Solicitor General’s quo warranto case does not even mention—are strangely silent on a very real case of billions of pesos of tax delinquency confirmed by the Bureau of Internal Revenue itself.

A BIR official told senators during a hearing on Tuesday that majority of the 60 licensed Philippine offshore gaming operators (Pogos) present in the country failed to pay the government an estimated P50 billion in withholding income and franchise taxes in 2019. “Pagcor collected P8 billion at least as regulatory fee, (but) that’s only 2 percent (of the operator’s gross gaming revenue). If it’s (the) franchise tax of 5 percent, that would be at least P17-18 billion,” the official added.

One wonders how such an egregious tax deficiency and abuse of the country’s financial system have escaped the Duterte administration’s hawk-eyed gaze. The President has, after all, been harshly vocal, unbending and relentless when calling out what he perceives as similar lapses in some of the country’s biggest corporations, to the point of threatening to jail their executives for “economic sabotage.”

However, since the revelation about the Pogos’ billions in unpaid taxes, the President has yet to utter a single word of reproach against the delinquent companies. In fact, for the past three years, the administration has held up the sector as an unqualified boon to the economy—supposedly by providing jobs, boosting the value of real estate with its thirst for employee housing and office space, and adding to the government revenue through taxes and licensing fees.

In 2019, the Philippine Amusement and Gaming Corp. (Pagcor) said it expected the sector to contribute P8 billion in licensing fees and royalties. Property consultant Leechiu, meanwhile, estimates that Pogos contribute some P36 billion in housing rental and about P11 billion more in office leasing costs a year.

So enamored is the government with the promised returns of online gambling that President Duterte last year turned down a Chinese minister’s request for the Philippines to ban this outlawed sector in China, shortly after its ally Cambodia did so. “We need them,” Mr. Duterte said—and that was that.

But the explosive growth of Pogos and their seeming favored status under this administration have come with a price. Illegal Chinese workers have proliferated, for one. Sen. Joel Villanueva, chair of the Senate committee on labor and employment, noted that Chinese workers—at least 300,000 by conservative estimates—who come in as tourists end up as salaried workers in Pogos. They, however, don’t pay taxes. “The fact that they don’t have tax identification numbers (TIN) means they are not paying taxes. It means they are illegal,” said Villanueva.

A spike in criminal activities in the country—from trafficking and forced labor to cyberfraud, prostitution and kidnapping for ransom—have also accompanied the Pogo expansion. The Philippine National Police says the number of Chinese suspects arrested for various crimes surged to 460 from January to August 2019, from only 86 in 2016.

On Wednesday, a 23-year-old Taiwanese national who was rescued in a National Bureau of Investigation (NBI) raid recounted how she had been tricked into a job in a Pogo company, worked under slave-like conditions, and was sexually harassed and threatened to prevent her from escaping. There were 30 others like her, she said, all on tourist visas, who were warned against seeking help from authorities lest their families in China suffer harm.

The Taiwanese woman’s tale is just the latest in a series of trafficking incidents the NBI has uncovered from raids on several prostitution dens hidden inside hotels, karaoke bars and high-rise condominiums, whose main clientele are Chinese Pogo workers.

The social ills now arising from the presence of Pogos have led the likes of Villanueva to question whether “the negative effects of the industry outweigh any benefit that the country may get from the proliferation of Pogos.” Citing the finance department, the senator noted that suspending Pogos would have only a 0.04 percent effect on the country’s economy.

Suspending the issuance of Pogo licenses until the kinks—illegal workers, unpaid taxes and licenses, long hours and unfair labor provisions—are ironed out would seem to be a forceful but sensible and necessary move at this time to better regulate the sector. But that assumes, of course, that Malacañang can be forceful when it comes to the deluge of Pogo companies and Chinese workers it has welcomed into the country with open arms.