House bill proposal: Fiscal regime for mining industry

Strip Coal Mining

The chairman of the House Committee on Ways and Means on Wednesday filed a bill establishing a fiscal regime for the mining industry.

In House Bill 5022, Albay Rep. Joey S. Salceda said his proposal pushes for an equitable imposition of royalty on mining operations within and outside mineral reservations.

Under the proposal, a 3-percent royalty tax shall be imposed on large-scale mining operations within a mineral reservation.

The bill also said a margin-based royalty tax shall be imposed on large-scale mining operations outside mining reservation areas, ranging from 1 percent to 5 percent.

The bill said small-scale mining operations shall be exempt from the payment of royalty.

Currently, the law requires payment of royalty fees only in mining sites declared as mineral reservations.

Trust fund

The measure also proposed the creation of the Natural Resource Trust Fund, a sovereign wealth fund for use by local governments where mines are located.

“On top of providing funds for rehabilitation of abandoned mines, prior to the enactment of Republic Act 7942, the fund accumulates resource revenues from mining operations, and extends their benefits to the next generations through educational programs, technological and research programs, health services, and disaster risk reduction management initiatives,” Salceda said.

Under the bill, the trust fund from the annual payment of mining contractors to the Bureau of Internal Revenue of an additional amount of 2 percent based on gross output for large-scale metallic mining which shall be remitted to the Bureau of Treasury within the first quarter of the succeeding income year.

The bill said failure to comply with this obligation would warrant immediate suspension or closure of the mining activities of the contractor concerned.

To ensure utmost care in fund handling, the bill said the fund shall limit discretionary spending until the next administration.

“The fund shall be used by local government units to support educational programs, technological, research programs of local relevance, disaster risk management, rehabilitation of abandoned mines, and health services programs of the communities directly affected by mining activities,” Salceda added.

The bill also optimizes revenues from mining agreements through an auctioning system to be established by the Mines and Geosciences Bureau (MGB).

The measure acknowledges that mining operations deleteriously affect the carrying capacity of the environment to the detriment of future generations.

The measure optimizes revenues from mining agreements through an auctioning system, to be established by the MGB. This will minimize awarding of mineral agreements based on asymmetrical information, first-come, first-served system, and patronage politics. Moreover, it shall promote investments in mineral-rich areas through an online portal open to the public.

The measure institutionalizes the nation’s participation in the Philippine Extracive Industries Transparency Initiative (PH-EITI) provided under DENR Administrative Order 2017-07 requiring full public disclosure in the mining industry, particularly in revenue collection and tax payments.



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