Existing mining law, revenue-sharing scheme ‘sufficient’ — new Finance chief

July 4, 2016 at 13:00

FINANCE Secretary Carlos G. Dominguez sees no need to raise the government’s revenue share from mines, a reversal from the Aquino administration’s “aggressive” bid to increase the tax take from the country’s mineral resources.

“We just have to follow the current law, which I believe, ha, I mean at this point in time, I believe is sufficient,” he said.

He was referring to the Philippine Mining Act of 1995, which the Supreme Court initially declared unconstitutional in January 2004, only to reverse itself on appeal by December that year.

Mr. Dominguez noted that since the existing mining law remains in effect, “until [a new law] is passed, we just have to follow the current law,” he said.

“SOMETHING WRONG”
In a separate interview, however, Environment Secretary Regina Paz L. Lopez — whose agency holds jurisdiction over the mining industry — said she feels that “the government should get more.”

“That’s my take because if you look at the numbers, the suffering is done by the community but the bulk goes to national taxes. I don’t think that’s right,” Ms. Lopez said.

“And then if you look at our share in the taxes, we don’t get much at all. I mean you saw it there, the 0.004% of government revenue. There’s something wrong with that.”

Ms. Lopez, an ardent environmentalist whose appointment caused ambivalence among mining firms, said she would “absolutely” push for the government to get a bigger share of mining revenues.

Sought for clarification, Socioeconomic Planning Secretary Ernesto M. Pernia said the matter has not been taken up by the Cabinet of President Rodrigo R. Duterte. He did not respond to questions regarding his position.

The Chamber of Mines of the Philippines has previously opposed moves by the preceding administration of former President Benigno S.C. Aquino III to overhaul the fiscal regime in favor of the government. It said that such a tax policy would negate efforts to attract investment to boost the economy.

Under the Aquino administration, the Department of Finance (DoF) led the inter-agency Mining Industry Coordinating Council in drafting the proposed law that would have increased the government’s total take to an average effective tax rate of 71%, according to preliminary simulations of DoF’s Fiscal Policy Division.

This is higher than the 62% currently in effect, already regarded as potentially the highest rate in Southeast Asia.

The proposed measure would have proclaimed the government as “owner of the minerals,” and provide it an annual take of 10% of a miner’s gross revenues, or 55% of adjusted net mining revenues (gross revenue less production and other deductible costs but not to exceed 10% of direct mining, milling and processing costs); and 60% of any windfall profit.

The proposed new tax regime would take the place of corporate income tax, royalty to indigenous cultural communities, duties on imported specialized capital mining equipment, mayor’s fee and/or business permits as well as other fees and charges imposed by host local governments.

However, House Bill No. 5367, authored by Marikina City 2^nd District Rep. Romero Federico S. Quimbo, remained pending at the ways and means committee level by the close of the 16^th Congress.

INCOME TAXES, NOT MINING TAX
Mr. Dominguez, who formally took the helm of the Finance department on Friday, said the new government instead will focus on readjusting individual and corporate income tax tables to be “more realistic and to correct them for inflation.”

“Our people expect that. It will also be good for business,” Mr. Dominguez said in his first official speech during the DoF’s turnover ceremony.

The package will be submitted to Congress around September, he said. Meanwhile, the Development Budget Coordination Committee will meet on Tuesday to fix the side of expenditure, to be included in the annual national budget plan that will also be up for approval in the coming months by Congress.

Mr. Dominguez sounded off that spending would be a priority.

“We save and refuse to spend to shore up our credit ratings-long after it has become unnecessary to do so,” he said. “Our first responsibility is not to please our foreign clients. Our first responsibility is to help deliver an economy that works for our people’s betterment.” — with Janina C. Lim