Mining Tax Bill contrary to gov’t pronouncements of support
THE Chamber of Mines of the Philippines in a statement welcomed pronouncements that mining – after languishing in a restrictive policy environment for more than a decade – will be accelerated under the new administration to support post-pandemic recovery efforts.
The rest of the statement reads:
The lifting of the moratorium on new mining permits and the open pit ban in 2021 will indeed contribute to the revitalization of the industry and will encourage badly needed foreign investments.
We submit, however, that the mining tax bill recently passed by the House Ways and Means Committee will once again set back the revitalization of the industry, contrary to pronouncements of the new administration. We lament the fact that no consultations took place with the industry that would have allowed us to prove that the onerous provisions of the bill would make the Philippine mining industry one of the highest taxed in the world. We also maintain that figures shown during the Committee hearing that purported to show the industry’s effective tax rate at 38% was woefully out of date as such report was done in the year 2000, prior to the doubling of the excise tax on mineral products under TRAIN 1.
Once again, the mining industry is faced with a drastic policy change that will not be conducive to its growth, preventing it from playing a major role in the recovery of our economy. Should this bill become law, three flagship mining projects that can otherwise substantially contribute to economic development in areas where they are located, result in a substantial amount of exports and tax revenues and a considerable amount of social expenses will instead be in jeopardy. In addition, a number of large-scale operations run the risk of closure, resulting in massive unemployment in their areas of operations.
Simply put, the onerous tax bill will once again put into question the stability of our policies, which is most detrimental to attracting foreign investments in such a capital-intensive industry. Foreign investors will simply look elsewhere; we are not the only country blessed with mineral resources. If further tax increases are unavoidable, the tax structure should not be onerous as to stop investments from coming in. This will sustain existing mines and encourage quality investments in the hugely untapped Philippine minerals sector, ultimately expanding considerably the tax base and providing far larger tax revenues to government.
We thus call on Congress to revisit the bill recently approved by the Committee on Ways and Means and allow for full and meaningful consultations with stakeholders. This will give all affected parties an opportunity to contribute to the passage of a mining fiscal regime that will encourage investments and finally unlock the industry’s huge economic potential.
