A state spending ban before the 2022 Philippine elections is expected to disrupt government infrastructure projects and delay reforms, according to an inter-agency body that sets macroeconomic goals.

A new government next year could also affect development priorities, which could affect reforms in the budgeting system, the Development Budget Coordination Committee (DBCC) said in a report on Friday.

“The implementation of the government’s infrastructure projects may be disrupted, as public works and the release of public funds during the election period are prohibited under the Omnibus Election Code of the Philippines,” it said.

The ban on public works starts 45 days before general elections, or from March 25 to May 8, 2022. The law also prohibits social welfare dole-outs during the period.

“Risks may be mitigated by the proper and timely conduct of early procurement activities, which in turn entails the approval and effectivity of the pertinent funding sources,” the committee said.

The DBCC said it supports a measure that will reform the budgeting system because it will limit appropriations to a timeline of one year while boosting public participation in the budget process. House Bill 9214 is pending at the committee on appropriations.

The body also cited fiscal risk from the enforcement of a law that increases the share of local governments in national taxes.

Finance Secretary Carlos G. Dominguez III earlier said this could cause lower economic growth because local governments were likely to spend the funds less efficiently.

Under Executive Order 138, some basic services will be transferred to local governments by 2024. These involve P234.4 billion worth of projects, according to government estimates.

The DBCC said it remains to be seen whether local governments can sustain the level of service before the devolution.

The Senate on Wednesday approved on final reading the P5.024-trillion national budget for 2022. — Luz Wendy T. Noble

The Bureau of Internal Revenue (BIR) has released the rules that will enforce a measure increasing the taxes on offshore gaming operators in the Philippines.

Under the rules, offshore gaming licensees — mostly Chinese-operated — that have failed to register or paid or even underpaid taxes will be penalized.

Under the law enacted in September, licensed offshore gaming operators will be taxed 5% on their gross gaming revenue starting next year. The law also requires foreigners working at offline gaming companies or their service provider to pay a 25% withholding tax on gross income.

The rules ask the BIR to shutter offshore gaming licensees, their gaming agents and service providers that fail to pay taxes.

The government will also slap a P20,000fine on a foreign employee who does not have a tax identification number.

Philippine offshore gaming operators must submit a list of their foreign employees and update their status or face fines.

“The BIR may recommend to other relevant agencies the revocation of the primary and other licenses obtained by POGO entities from government agencies and/or their perpetual or temporary ban in employing foreign nationals,” the BIR said.

Giving false information about their address is another violation under the law, according to the rules.

The Department of Finance earlier said they expect tax collections from the POGO industry to hit P76.2 billion from 2022 to 2023.

It said P35.1 billion would come from the 5% tax on gross gaming revenues, while P41.2 billion will come from the 25% withholding tax on foreign workers’ gross income.

Under the rules, 60% of the taxes will be used to fund the country’s Universal Health Care Act.

Meanwhile, 20% will be allotted to improve state healthcare facilities, and another 20% will go to sustainable development programs. — Luz Wendy T. Noble