Tax Increase on Jai-Alai and Horse-Racing Winnings

Sweepstakes related to charity and horse racing are to be held under rules set by the governing Board in accordance with Republic Act No. 309.
In cases where a sweepstakes race cannot be held due to war, calamity, or insufficient horses for prize determination, the Board may prescribe an alternative prize distribution method that is just, equitable, and expeditious.
Sweepstakes and ticket sales are exempt from all taxes except:
- Each ticket must bear a government-issued internal revenue stamp costing twelve centavos.
- A 5% deduction from the total prize fund must be remitted to the Bureau of Internal Revenue within 10 days after each sweepstakes as a substitute for income tax on prize winners.
Prizes paid from the remaining prize fund after the 5% deduction are exempt from income tax.
Tickets are government-printed and considered government securities, providing legal protection against forgery or alteration.

The increased taxes on gambling winnings are aimed at generating additional government revenue to support accelerated national development.
Gambling facilities are justified primarily due to their contribution to charitable projects and government upkeep.
Moral and economic considerations support imposing higher taxes on legalized gambling to ensure social equity and public welfare.

The decree amends specific sections of existing laws, namely Section 260-A of the National Internal Revenue Code and Section 4 of Republic Act 1169.
The provisions became effective immediately upon promulgation on June 3, 1977.
Authority to enforce and administer the tax collection is vested in the operators, managers, Boards, and the Bureau of Internal Revenue.

While the decree mandates withholding taxes and remittance, it implicitly relies on government enforcement mechanisms for compliance.
Illegal alteration or forgery of sweepstakes tickets is subject to stringent penalties because these tickets are classified as government securities.
The decree highlights the government's interest in regulating and taxing all forms of gambling winnings uniformly to prevent tax evasion and abuse.