MINES and Geosciences Bureau-Mine Management Division head Alfredo Genetiano is calling for calm over proposed increase in mining taxes.
“This is just a proposal, we have to wait for legislation to approve it,” he said in a press statement.
The Mining Industry Coordinating Council (MICC) approved the imposition of additional tax on mining revenues under a draft bill of a new revenue-sharing agreement between the government and mining companies, proposing to impose either a 10 percent tax on gross revenues or a tax of 55 percent on adjusted mining revenues.
“Under EO 79, any proposal on revenue will have to pass through legislation, we have to wait, and there are no figures yet,” Genetiano said.
The taxes will be imposed in lieu of all national and local taxes, except real property tax, value-added tax, capital gains tax, stock transaction tax, documentary stamp tax, Securities and Exchange Commission fee, donor’s tax, environmental fee, water usage fee, and administration and judicial costs.
The bill is to be submitted to the Office of the President for approval. If the president approves the proposal, Congress will have to decide on it.
If the hike in taxes happen, an anticipated trickle effect will benefit host communities where mining companies operate, thus hiking revenue they receive from companies.
Top mining companies operating in Benguet include Benguet Corp., which has been operating here for 109 years; Lepanto Consolidated Mining Corp., which has been operating her for 70 years; and Philex Mining Corp., which has been operating for over 50 years.
According to the National Economic and Development Authority (Neda), the mining industry contributed P3.8 billion to Cordilleran economy in 2011, which was eight percent of the region’s gross domestic product (GDP). In 1987, mining contributed 23 percent or P2.6 billion.
The average contribution of the mining industry to the country’s GDP from year 2000 to 2010 was pegged at 1.30 percent and its average share to the country’s total investment in the same years was 2.5 percent.
“The proposed MICC tax increase will kill legitimate mining industry and have negative economic effect,” the Chamber of Mines of the Philippines said in a statement.
“The remittance of the LGU share of excise tax is being fast tracked now so LGUs (local government units) will receive them on time. Local communities need to know where the share of taxes are utilized. Mining companies spend 1.5 percent of operating cost to social development programs on top of their corporate social responsibility activities,” Nelia Halcon , executive director of COMP, said.
“How can there be higher taxes when there are no new investments? If government wants more taxes, it has to approve mining tenements and projects. Extracting taxes from current operations will have an adverse effect on business,” she added.
“The new revenue sharing policy being proposed by the MICC will have a negative effect to government revenues and will render future legitimate mining projects uncompetitive and therefore unfunded,” the statement said.
According to COMP, the Philippine mining industry currently pays one of the highest tax rates in the world.
The MICC proposal to impose more taxes will negatively impact one of the country’s strategic economic potentials rendering Philippine mining projects uncompetitive and killing an industry that directly supports 250 thousand families with a multiplier factor that has benefited millions of Filipinos.
Mining employs over 17,000 workers in the region, with over 7,000 in large-scale mines while 10,000 are working in small scale mines, Neda said.