The Department of Finance (DoF) on Tuesday shot down a bill in the House of Representatives seeking to exempt the Philippine Amusement and Gaming Corp. (PAGCOR) from the payment of corporate income tax, saying the proposal is not welcome at this time when the government grapples with a huge budget deficit.

“Policy-wise, the Department of Finance is not inclined to support the bill because it will deprive the government the revenue which is much needed at this point,” DoF Director Rogaciano Buenviaje told members of the House committee on ways means.

The House panel, chaired by Antique Rep. Exequiel Javier, has been conducting public hearings the proposal to exempt PAGCOR from income tax, embodied under House Bill 5891 filed by Manila Rep. Amado Bagatsing.

Bagatsing’s measure seeks to amend Republic Act 9337, which removed PAGCOR from the class of income tax exempt government-owned and controlled corporations (GOCCs).

Prior to the enactment of RA 9337, PAGCOR was among the five income tax exempt corporations, along with the Government Service Insurance System (GSIS), Social Security System (SSS), Philippine Health Insurance Corp. (PhilHealth), and Philippine Charity Sweepstakes Office (PCSO).

Buenviaje said granting tax exemption to PAGCOR would result in an annual revenue loss of P5 billion based on the assessment of the Bureau of Internal Revenue (BIR) for the year 2006.

“That P5 billion will add very much to the need of the government right now,” the DoF official said.

Cagayan de Oro City Rep. Rufus Rodriguez agreed with Buenviaje, adding that the primary duty of Congress is to pass the P1.541-trillion national budget for next year, which will be funded by revenue collections.

“Congress should not allow any exemption at this point. Congress must make sure that the money from all corporations goes to the government,” Rodriguez said.

The government expects a budget deficit of P250 billion in 2010.

In his explanatory note to the bill, Bagatsing said the 30 percent corporate income tax imposed on PAGCOR is “unexpected and very onerous burden” and prevents investors from transacting with the corporation.

“There is therefore a need to restore PAGCOR’s tax exempt status to entice more investors to invest in its operations, the benefits of which shall ultimately redound to more socio-civic projects,” Bagatsing pointed out.