Time running out for mining revenue-sharing bill

April 13, 2015 at 11:05

Posted on April 07, 2015 10:55:00 PM
By Melissa Luz T. Lopez, Reporter

THE PHILIPPINES may run out of time to pass a proposed law that contains a new mining revenue-sharing scheme as discussions about it is slated to take off by July the earliest, a congressional leader said.

The House of Representatives will start deliberations on House Bill (HB) 5367 by the “third regular (session) realistically,” Speaker Feliciano R. Belmonte, Jr. said in a text message last week when asked for updates on the measure.

However, he added that “[the chances for the mining law] are not zero. There is still a possibility [for the bill’s passage].”

All tax measures must first be approved by the House before it can be taken up by the Senate, as indicated in the Constitution.

Congress is currently on a six-week summer break and will return for a month-long session from May 4 to June 11 to close the second regular session. They will reopen on July 27 for their third and last regular session, which is expected to end earlier in light of the May 2016 presidential elections.

On Feb. 3, Marikina Rep. Romero Federico “Miro” S. Quimbo (2nd district) filed HB 5367, which is the product of consultations of the Malacañang-created Mining Industry Coordinating Council (MICC) since 2012.

PASSAGE WOULD LIFT BAN ON ISSUING MINING PERMITS
Under the proposal, the government as “owner of the minerals” gets 10% of the company’s gross revenues or a 55% share in adjusted net mining revenue yearly, whichever is higher; and 60% of any windfall profit above the net revenue threshold.

Its passage would also effectively lift the nationwide ban on the grant of mining permits in place since 2011 and extended indefinitely through Executive Order 79 signed July 6, 2012.

The measure also provides that mining companies will enjoy exemptions from corporate income tax, duties on imported specialized capital mining equipment, mayor’s fee and/or business permits, “and other fees and charges imposed by host local government units.”

However, mining companies will still have to pay value-added taxes, among many other taxes.

The measure was then referred to the House committee on ways and means which Mr. Quimbo chairs, but has not been tackled in a committee hearing so far.

Asked to confirm the timetable, Mr. Quimbo said the committee is still in the process of soliciting inputs from stakeholders prior to picking up formal deliberations on the proposed bill.

“We want something that is competitive and realistic. Too high a tax will make the country uncompetitive,” he said in a text message last April 1. “We’re not the only game in town, so to speak. But we cannot stay idly by as the status who effectively favors the proliferation of small-scale mining that both destroys the environment and at the same time completely avoid tax payments. It’s a double whammy.”

Malacañang earlier said that it wants the bill approved by Congress by June, to which chamber leaders remained noncommittal.

Since its filing in February, industry leaders have opposed the new revenue-sharing scheme, saying it is disadvantageous for miners.

NARROW TIMETABLE
Business groups expressed alarm anew with the narrow timetable set by House leaders, saying it could further dampen the attractiveness of investing in the Philippines despite its rich resources.

“The serious negative consequences of the proposed new Mining Fiscal Regime need an objective public review and should not be rushed through Congress just to please anti-mining groups without much more in-depth discussion,” Julian H. Payne, president of the Canadian Chamber of Commerce of the Philippines (CanCham), said in a text message.

“Increasing [tax] rates will discourage future domestic as well as foreign investment in well-regulated environmentally and socially responsible large-scale mining. As a result, total future revenue from such mining for the government will almost certainly be less (not more) and the potential for very much-needed growth in long-term employment possible with such mining in remote areas will be foregone. It will leave the Philippines wide open for increased irresponsible and usually illegal small-scale mining which does not yield any revenue to the government, [which] is the well-known cause of widespread environmental degradation, and encourages local corruption to avoid effective regulation.”

Ian W. Porter, president of the Australian-New Zealand Chamber of Commerce Philippines, Inc. (ANZCham), said that “the sector will not develop unless there is certainty and a fair regime which is internationally competitive. With present low commodity prices there is a great deal of competition.”

CanCham and ANZCham host a number of international mining companies operating in the Philippines.

The Chamber of Mines of the Philippines was of the same view.

“Yes, we feel the timeline is too short to iron out the measure. There are a number of considerations to look at because this concerns every company’s bottom line and the country’s competitiveness,” Executive Vice-President Nelia C. Halcon said in a text message.

NO RUBBER STAMP
Mr. Belmonte said Congress will not necessarily heed the MICC’s new proposal, saying: “That (bill) is what the Executive wants, but we have a real power to try to reach the best formula that can be passed by the majority. It’s not a yes or no situation.”

For his part, MICC member and Mines and Geosciences Bureau Director Leo L. Jasareno warned that not having enough time to enact the bill into law would stand as a serious setback for the Philippine mining industry.

“Government may have to come up with alternative measures to cushion the impact of delays in passage of the law.”