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Assessment of the Amusement Tax


The study re-examines Section 125 of the NIRC of 1997 which imposes amusement taxes on the proprietors, lessees or operators of cockpits, cabarets, night or day clubs, boxing exhibitions, professional basketball games, jai-alai and racetracks, to determine whether or not there is a need to introduce policy reforms. As regards revenue performance, it notes that the amusement tax in general is not a significant source of revenue. From 1990-2002, the highest collection was recorded in 1999 at P201 million and the growth shows an erratic trend. Likewise, its highest contribution to total BIR collections was in 1996 and 1999 at 0.059%. Moreover, there seems to be an ineffective implementation of the amusement tax particularly in horse racing and this may be attributed to the “in lieu of” phrase provided in the original franchise given to the racing clubs. With the shift from the franchise tax to the VAT, there is a need to clarify whether the “in lieu of” phrase is carried or not with the shift. The study therefore suggests that there is a need to review the policy on the national amusement tax in view of the substantial aggregate tax burden imposed on the sector by both the national and local governments. Since the tax is really not effectively imposed and contributes less than 1% to the national government collection, it may be worth considering to just allow local governments to optimize their collections from this specific tax base. Removing the amusement tax at the national level can simplify the tax system and allow the BIR to concentrate its efforts on the major taxes.

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