ON Monday, the Department of Finance reported that should the recent order of Environment Secretary Gina Lopez be fully implemented—to wit, the closure or suspension of 28 mining operations—the financial loss to local governments across the country will exceed P800 million.
The exact figure, P821.13 million, is higher than an earlier estimate of P653 million, and is based, the DOF said, on a 100-percent accounting from the 17 affected cities and municipalities in 10 provinces.
Significantly, the income loss does not include the potential income from mineral production sharing agreements (MPSAs), 75 of which were canceled by Lopez in a second order; the foregone revenues from those very likely could be worth billions of pesos.
What is particularly alarming about the financial data presented by the DOF is that three municipalities, all in otherwise impoverished areas, will lose more than half of their operating income. Carrascal, Surigao del Sur, will lose P198.3 million, or 62.3 percent of its total operating income; Tagana-an in Surigao del Norte will lose P70.3 million, or 54 percent of its income; and the municipality of Tubajon in the Dinagat Islands will lose P38 million, which amounts to 55.4 percent of its total operating income.
Under the 1995 Mining Act, local governments benefit from mining in their jurisdictions through real property taxes, local business taxes, mayor’s permit fees, regulatory and administrative fees, and occupation fees. The local government units are also entitled to a share of mining taxes collected by the national government; the loss for this alone will amount to P481.17 million. In addition to all these income streams, the provinces where mining operations are located also collect governor’s permit fees, environmental fees, taxes to offset soil depletion, and where applicable, processing permits for sea vessels to carry away mined ore.
It should be emphasized that the financial loss is not a one-time charge against local budgets, but is an annual shortfall that will burden local governments unless and until something replaces mining as an income source.
Lopez’s contention in defending her moves to largely eliminate mining in the Philippines has been based on two essential points: First, that mining, at least as far as the now-closed or suspended operations are concerned, causes an unacceptable level of environmental damage; and second, that local communities do not receive the economic and social benefits to which they are entitled as a fair return for hosting mining operations. Lopez refers to this second notion as “social justice.”
The details from the DOF beg the question, what sort of “social justice” is represented by removing the biggest source of revenue from local governments in some of the poorest areas of the country, as well as their potential income from future mining activities? The mining shutdown may actually be based on compelling reasons that are a matter of greater national interest, but these consequences of the action are in no way acceptable, and are in stark contrast to President Rodrigo Duterte’s often expressed objective to spread economic growth equitably throughout the entire country.
Before the final decision to carry out Lopez’s orders is made, it is the inescapable duty of the Duterte administration to develop an economic plan, one that can be carried out with immediate positive effect, to provide the affected local governments and the citizens under their care with sustainable alternatives to the lost mining revenue. It is the duty of the administration precisely because President Duterte supported his environment chief’s controversial move; the easy way out would have been to simply repudiate it.
In that sense, the administration may consider it a positive challenge to put its money where its mouth is, as the saying goes, and start now to implement policies that uplift poor communities without causing further harm.