The Department of Finance (DOF) and the Mining Industry Coordinating Council (MICC) will begin exploring the feasibility of increasing the excise tax on mining on a per-commodity basis next month, according to finance officials.
Aside from taxing mineral resources on a per-commodity basis, Finance Secretary Carlos G. Dominguez III said the next MICC meeting next month would also include discussions on possible amendments to Executive Order (EO) 79.
“It [increasing excise taxes on a per-commodity basis] makes sense. You don’t use the same tax rate for nickel and for copper. The extractive costs and values [of minerals] are different,” Dominguez told reporters in an interview.
EO 79, which was signed during the administration of former President Benigno S. Aquino III, institutionalized reforms in the country’s mining sector.
DOF Undersecretary Karl Kendrick T. Chua confirmed that the next MICC meeting would be held in the first week of March.
DOF Undersecretary Bayani H. Agabin earlier said the committee will also review proposals on revenue-sharing schemes, aside from the increase in the mining excise-tax rate. “Looking not only on the tax component, they are looking at the royalties also. [In terms of a sharing scheme] I think that is what they are looking at, nothing is final,” Agabin said.
Last year the technical working group (TWG) of the MICC has endorsed the lifting of the ban on open-pit mining in the country, provided that the laws and regulations governing the process will be “strictly enforced” by the Department of Environment and Natural Resources (DENR), according to Environment Secretary Roy A. Cimatu.
The MICC-TWG added that the DENR, through the Mines and Geosciences Bureau (MGB), should be tasked to take a close look and act on the issues involving the expansion of 24 mining areas covered by mineral production sharing agreements. The MICC is cochaired by Cimatu and Dominguez.
As for the review of the first batch of the 26 mines ordered either closed or suspended by former Environment Secretary Regina Paz L. Lopez, the MICC expects the final report to be out by March.
As proposed by Dominguez, the MICC agreed to conduct another review in 2019 and succeeding ones every two years, thereafter, in line with the MICC’s mandate under EO 79 to review all mining operations once every two years.
Last April the DENR issued DENR Administrative Order 2017-10, imposing a ban on the open-pit method of extraction for copper, gold, silver and complex ores.
The MGB, an agency attached to the DENR, as well as the Chamber of Mines of the Philippines (COMP), had earlier thrown their support behind an output-based tax regime for miners.
COMP said the proposed scheme should be benchmarked globally so that the Philippines will not lose mining investments to countries with a more competitive tax regime.
Ronald Recidoro, executive director of COMP, told the BusinessMirror earlier that COMP’s proposal during the Aquino administration was, in fact, a commodity-based approach to mining taxation, which he described as “more accurate and more correct.”