The Mineral Industry Coordinating Council (MICC), an interagency body tasked to oversee reforms in the mining sector, has approved the revenue-sharing scheme for the industry, which will levy a 10 percent tax on gross revenues or a 55-percent share of the adjusted net mining revenues (ANMR) of companies, whichever is higher.
“The government will get the larger portion in the sharing agreement,” Mines and Geosciences Bureau (MGB) Director Leo Jasareno told The Manila Times in a telephone interview over the weekend.
“That will be in lieu of all national and local taxes except real property tax, VAT [value-added tax], capital gains tax, stock transaction tax, documentary stamp tax, SEC [Securities and Exchange Commission] fee, donor’s tax, and environment fee,’ Jasareno added in a text message.
The signed version of the proposed revenue-sharing scheme will be transmitted “as soon as possible” to President Benigno Aquino 3rd for approval before it is submitted to Congress for legislation, he said.
Under the arrangement, the government will also collect a certain percentage from the windfall profit of mining companies.
“This will be on top of the 55 percent adjusted net, or 10 percent of gross revenues collected from a mining company,” Jasareno said.
It has been nearly two years since Aquino signed Executive Order No. 79, which mandates reforms in the mining sector with respect to responsible operations and environmental protection, formalizes the place of small-scale mining in the industry, and reaffirms the Philippine Mining Act of 1995 under Republic Act (RA) No. 7942.
The MICC is co-chaired by Department of Environment and Natural Resources (DENR) Secretary Ramon Paje and Department of Finance (DOF) Secretary Cesar Purisima.
Lobby against the scheme
Earlier, the country’s big mining lobby called on the Aquino government to drop the proposed revenue-sharing scheme, saying there is no need to raise taxes to increase the government’s share from the mineral industry.
Ronald Recidoro, vice president for policy of the Chamber of Mines of the Philippines (COMP), said the government should, instead, increase linkages and maximize the benefit streams from the mining industry to increase the government’s take from the country’s mineral resources.
“If the government wants a bigger take from mining, there are many other options it can explore before increasing the tax on mining, which is a step that will likely kill the industry,” Recidoro said in a statement.
Simply increasing the tax on mining projects, according to Recidoro, will have an enormously negative effect.
Given the chilling effect increased taxes will have on investments, COMP suggests that the key to increasing the mining industry’s contribution to the economy lies in increased mining investments and in enhancing the local backward and forward linkages in the sector—essentially maximizing mining’s multiplier effect, especially in the areas where mines operate.
“With very few projects far down the pipeline, an increased tax on new projects will not immediately result in a bigger take for government. But what it will definitely do is make the Philippines uncompetitive—killing investor interest and inhibiting growth in the sector,” he said.
“In effect, increasing the tax will kill the goose that lays the golden egg,” he added.
Jasareno, on the other hand, said the government will not propose something that it deemed detrimental or disadvantageous, or not competitive for the industry.
“We feel that the government is not getting its fair share from the mineral industry and that a decision has to be made,” Jasareno said.