• Mining revenues should redound to the benefit of the Filipinos

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    AL S. VITANGCOL III

    ENVIRONMENT Secretary Gina Lopez announced to the media on February 8, 2017, the release of the closure orders for 23 mining firms and suspension orders for five others. However, Lopez declined to release the recommendations made by the Mines and Geosciences Bureau (MGB) which, according to some quarters, the Secretary does not agree with.

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    In media interviews, Lopez quipped, “Who said it can only be mining?” when asked about the possible loss of livelihood for those impacted by the closure orders. She further said, “26 of the mining operations are in Caraga. Bakit mahirap yung Caraga? (Why is Caraga still poor?)” She added that she would initiate ecotourism projects for these affected areas.

    All natural resources are owned by the State

    The 1987 Constitution declared that all natural resources, including mineral lands (which we call mines) are owned by the State. This was clearly delineated in Section 2, Article XII of the Constitution. The same provides that, “with the exception of agricultural lands, all other natural resources shall not be alienated.” This means that these mines cannot be owned or bought by private individuals or corporations. These belong to the Filipino people.

    If these mines, and the minerals therein, belong to the Filipino people, then why are we not benefiting from them?

    Well, you guessed right. We were duped by our lawmakers, which passed and enacted the mining laws of our land.

    The Philippine Mining Act of 1995

    Republic Act 7942, commonly known as the Philippine Mining Act of 1995, and its Implementing Rules and Regulations, serve as the framework for the conduct and regulation of mining operations in the country. The law is perfect only insofar as to its declaration of policy. It states,

    “Section 2. Declaration of Policy. – All mineral resources in public and private lands within the territory and exclusive economic zone of the Republic of the Philippines are owned by the State. It shall be the responsibility of the State to promote their rational exploration, development, utilization and conservation through the combined efforts of government and the private sector in order to enhance national growth in a way that effectively safeguards the environment and protect the rights of affected communities.”

    However, one will realize the sell-out in Chapter XIV of the same law. It provides that, “The total government share in a mineral production sharing agreement shall be the excise tax on mineral products as provided in Republic Act 7729, amending Section 151(a) of the National Internal Revenue Code.”

    This was reiterated in Section 84 of Chapter XV – “The contractor shall be liable to pay the excise tax on mineral products as provided for under Section 151 of the National Internal Revenue Code: Provided, however, that with respect to a mineral production sharing agreement, the excise tax on mineral products shall be the government share under said agreement.”

    Reducing this legalese to layman’s terms, it means that whoever is operating the mines, whether in a private capacity or in joint venture with the government, shall pay the government only the excise tax.

    Wow! How big (or minuscule) is this excise tax?

    Section 151 of the NIRC

    The National Internal Revenue Code (NIRC) of 1997 provides for the amount of excise tax that should be imposed on mineral products. The tax to be levied, assessed, and collected on minerals, mineral products and quarry resources, are summarized as follows:

    1) On coal and coke, P10 per metric ton;

    2) On all nonmetallic minerals and quarry resources, two percent based on the actual market value of the gross output thereof;

    3) On all metallic minerals, a tax based on the actual market value of the gross output thereof: copper and other metallic minerals, two percent; and gold and chromite, two percent.

    4) On indigenous petroleum, three percent of the fair international market price thereof.

    Note that locally extracted natural gas and liquefied natural gas are not subject to any excise tax.
    So, there you are. Mining operators are paying the government a measly two percent excise tax. This is the answer to the question, “Bakit mahirap yung Caraga?”

    Time for reform and change

    The applicable law/s of this land is the culprit. The laws are disadvantageous to the Filipino people. But who crafted these laws? Don’t ask me. Ask yourselves whom you voted for.

    Imagine this. Filipinos, if ever they have a bank deposit and it earned an income, a fixed tax of ten percent is automatically withheld by the bank and remitted to the government.

    On the other hand, a multi-billion-peso mining firm, earning from the sale of minerals, which rightfully belong to the Filipino people, will be remitting to the government a measly two percent excise tax.

    Why not levy and impose at least 12 percent excise tax on mineral products? The government is planning to impose additional taxes on the Filipino people. Why not get these taxes from these mining operators and spare the lowly Juan dela Cruz from additional burden?

    My insight tells me that increasing to 12 percent the excise tax to be imposed on mineral products will not happen. The public should know that some of your congressmen are in fact mining operators themselves.

    Responsible mining fund

    Our Constitution directs that the use of property bears a social function, and all economic agents shall contribute to the common good. This is clearly stated in Section 6 of Article XII.

    Further, it is the duty of the State to promote distributive justice and to intervene when the common good so demands.

    The average annual gross production value in mining, based on data from the last five years, is estimated at P158 billion. The average annual excise tax paid to the government, during the same period, amounted to P2.5 billion If we extrapolate this to 12 percent, then the government should have collected P15 billion.

    Here is my unsolicited advice to the President of the Republic and to the Secretary of the DENR – allow the re-opening of the mining operations, subject to their compliance with the following:

    1. Extraction of minerals should not degrade the adjoining environment.

    2. Payment of 12 percent tax up from the usual two percent.

    3. Establish a Responsible Mining Fund. The funds should be contributed by the mining operators, equivalent to 10 percent of their gross sales during the last six years. This fund is estimated to be around P75 billion.

    4. Construction of hospitals in mining sites and building of drug rehabilitation centers in key areas. The expenses for these infrastructures shall come from the established Responsible Mining Fund.

    If these four conditions can be met by the mining companies, then they should be allowed to operate. Otherwise, even if they are environment friendly, without the “correct and appropriate” taxes imposed on them, they should not be allowed to operate.

    This is a sure way of getting back what is due to the Filipinos.

    After all, the minerals extracted from the mining pits actually belong to the people.
    Ang Pilipinas Para Sa Pilipino.

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