The government has dropped the proposed unified tax collection scheme, as it counters the Aquino administration’s initiatives to increase revenue from mining industry, the Department of Environment and Natural Resources (DENR) said on Monday.
Environment Secretary Ramon Paje told reporters that they are now working on new permutation on the proposed revenue-sharing scheme, citing concerns raised by the Mines and Geosciences Bureau (MGB) that the present proposal might be lower than the existing collection.
“The general director now is for us to have better revenue-sharing scheme than the existing collection,” Paje said.
“Why would we recommend something lower than existing? Whatever we submit to the President and to the Congress . . . should be better than the existing revenue sharing,” he added.
The Mining Industry Coordinating Council (MICC), the inter-agency body tasked to draft legislation for a new mining revenue scheme, earlier said that it wants half of what the mining companies make.
Under draft bill entitled “Philippine Mining Revenue Sharing Arrangement Act of 2013,” the MICC plans to adopt a single tax scheme which the government takes 10 percent of the gross revenue of mining projects and 50 percent of the profit, be it gross or net.
The MGB, however, said that the proposed mining revenue-sharing arrangement is actually lower than the existing tax payments of mining contractors.
“For instance, in the case of gross production value of mining for the year 2011, which is P163 billion, the total taxes paid by the mining contractors during the same period amounted to P22.2 billion. This is equivalent to 13.6 percent of the gross production value,” MGB Director Leo Jasareno said in a letter to the Board of Investments.
Jasareno added that considering that the proposed draft bill is inclusive of all taxes and royalties—including regular corporate income tax, excise tax, business tax, royalty payments for indigenous cultural communities and royalty of minerals/mineral products extracted from mineral reservations—except real property tax, the more that the government take will be lower.
Instead, the MGB has proposed to implement the present fiscal tax regime but less the incentives plus 5 percent of the gross sale as royalty payment, applicable to mineral and non-mineral reservation areas.
“The MGB proposal is to keep all taxes, whatever taxes that we have right now, and remove incentives and then just implement the royalty system, which will be our share from the mineral resources,” Paje said.
The DENR chief stressed that implementation will be across the board for the removal of the incentives, including income tax holidays and the imposition of the 5-percent royalty.