MANILA, Philippines — Albay Rep. Joey Salceda is planning to file a bill that seeks to put in place a new tax regime for the mining industry, and set up a sovereign wealth fund for development projects of future administrations.
Salceda, who also chairs the House Committee on Ways and Means, said he is drafting a tax reform bill, which will increase the taxes imposed on mining companies.
“We are working on it already. I’m doing the paper, I’m talking to people, I’m talking to advocates,” Salceda said.
Under his proposed bill, Salceda will push for the increase in excise tax rate on mineral production to five percent from the current rate of four percent.
He is also proposing for the imposition of an additional two percent tax on the gross revenues of mining companies, which will be used to create a sovereign wealth fund.
“Essentially, I’m increasing the excise tax by one percent, from four to five. Sovereign wealth fund, two percent of gross (revenues),” he said.
Salceda said there is a need to establish the fund to benefit future generations, especially with minerals being non-renewable resources.
“(It’s a) non-repeating resource. Gold in Albay belongs to the Philippines and belongs the next Filipinos. You have to wait two million years for a new subduction to at least produce the next ounce of gold. So there at least should be intertemporal benefits across generations,” he said.
As such, he said the proposed sovereign wealth fund accumulated in one administration should only be used by the next one.
This means that if the bill becomes effective next year, the next president can use the fund generated in the last three years of the current administration, while the money accumulated during his or her term will be used by his or her successor.
“It also has some substory, which says ‘I can’t use it anyway so I won’t take an interest in it.’ It’s a self-limiting incentive system,” he said.
Currently, there is a moratorium on new mineral agreements, as provided under Executive Order 79, until a legislation rationalizing existing revenue sharing schemes and mechanisms takes effect.
In line with this, the Department of Finance (DOF) earlier proposed a new mining fiscal regime, which was originally part of Package 2 Plus of the Comprehensive Tax Reform Program (CTRP). Salceda’s proposal is different from the DOF’s.
The DOF’s proposal made headway in the House of Representatives during the 17th Congress, but failed to hurdle the Senate.
Given the lack of progress, the inter-agency Mining Industry Coordinating Council earlier deferred making a recommendation to lift the moratorium. The DOF said the mining bill would have to be refiled in the 18th Congress.