Environment group urges further hike in mining tax

MANILA, Philippines — While the first package of the tax reform bill is now up for the President’s signature, which includes a double excise on mining, natural resources advocates called on a much higher levy for the industry.

Bantay Kita, a coalition of natural resource governance advocates, said increasing excise tax on mining companies from two percent to four percent under the Tax Reform Acceleration and Inclusion (TRAIN) bill is still insufficient.

“This is a good start, but it is still low. We urge legislators to consider collecting royalties from all mining operations, not only those that operate within mineral reservation areas,” Bantay Kita national coordinator Tina Pimentel said.

The group is recommending the imposition of the five percent mineral royalty payments for all mining operations based on market value of gross output.

Currently, the fiscal regime only imposes the five percent royalty payments to mining operations situated in mineral reservation areas.

There are only four provinces declared by government as mineral reservations sites. These are Zambales, Surigao del Norte, Surigao del Sur, and Dinagat Islands and about 40 percent of large scale metallic mines operate within these mineral reservation areas.

“All mining operations in areas within the Philippine jurisdiction should be subject to royalty payments in order for the country to increase its benefits from resource extraction. Minerals are finite and once extracted, we only have one opportunity to benefit from it,” Pimentel said.

Based on last year’s data, approximately P2 billion was collected from large scale metallic mines as royalty from mineral reservation areas.

“Had all mining companies been levied this tax, we would have collected an estimated P4.5 billion from large scale metallic mining operations,” she added.

Furthermore, the group is calling for the imposition of windfall gains tax and scraping of all unnecessary incentives accorded to mining companies.

Windfall gains tax gives the government an opportunity to earn more when mineral prices are on the rise.

“We urge legislators to maintain the corporate income tax rate imposed on mining companies, given that their contribution to the country’s GDP (gross domestic product) remains insignificant,” Pimentel said.

The mining industry contributes less than one percent to the national economy.

The local minerals sector already said they are accepting the four percent duty on mining but it hopes to gain assurance from the government that there will be a more stable policy to attract more foreign investments.