Two nongovernment organizations on Tuesday questioned the “hasty” committee-level approval of a House substitute bill establishing a new fiscal regime for the mining industry.
The Bantay Kita and Alyansa Tigil Mina (ATM) were referring to a still unnumbered bill, which proposes a margin-based royalty on income for all metallic mining operations outside of mineral reservations.
House Ways and Means Committee Chairman and Nueva Ecija Rep. Estrellita B. Suansing, who announced the committee’s approval, said the bill will replace House Bills 422 and 7994.
The lawmaker said the substitute bill aims to level the playing field considering that, under the present taxation, only mining contractors inside the mineral reservations pay royalty tax.
In addition, she said, the draft substitute bill ensures that the government gets its fair and rightful share in the profits from mining operations.
Under the approved substitute bill, large mining contractors will follow a margin-based royalty on their mining operations.
If the margin is 1 percent up to 10 percent, the royalty will amount to 1 percent; if it is 10 percent to 20 percent, 1.5-percent royalty; 20 percent to 30 percent, 2-percent royalty; 30 percent to 40 percent, 2.5-percent royalty; 40 percent to 50 percent, 3-percent royalty, 50 percent to 60 percent, 3.5-percent royalty, 50 to 70 percent, 4-percent royalty; and above 70 percent, 5-percent royalty.
Small-scale mining operations, whether within or outside of mineral reservations, will pay royalty amounting to 1/10 of 1 percent of gross output, levying windfall profits tax to secure the government’s fair share.
Under the substitute bill, the corporate-income tax is retained, including excise tax and royalty to indigenous people, local business and real property taxes.
Instead of the proposed margin-based royalty, Bantay Kita is appealing to lawmakers to approve a tax regime that ensures fair and equitable share from the one-time extraction of the country’s mineral resources.
Bantay Kita is proposing a 5-percent mineral royalty payment on all mining operations that would add a total of at least P2.5 billion to annual government revenue.
The proposal, the group added, is also administratively more feasible in terms of transparency and ease of collection.
“Royalties are to guarantee payments to the government as resource owner. The margin-based royalty on the income of operations will not ensure payments for minerals, and if royalty is profit-based, the government will be collecting less over the mine life.”
The group also asked whether the proposed bill would ensure public disclosure of profit information so that the community can monitor the proper payment of taxes.
“Will the costs of operations be disclosed publicly? Congress should ask for simulation of tax collection, or the government might end up, [and even] lower tax take before the increase in excise tax,” the group said.
The anti-mining group ATM said it welcomes new taxes for mining operations with the intent that communities and the whole country can benefit from the revenues from extracting minerals.
However, Jaybee Garganera, national coordinator of ATM, told the BusinessMirror in a text message that the group supports the proposition that new taxes must be based on gross revenue, and not only on margins of income.
“In effect, this new substitute bill lowered the royalty payments of large-scale mining operations in mineral reservations. It would have been more just if all large-scale mining operations were levied a 10-percent royalty-payment requirement, based on gross income,” he said.
Moreover, ATM said while it supports the provision that a ban on open-pit mining was inserted in the substitute bill, the group is skeptical that Congress will pass such specific provision.
“At most, we can expect that, at the final stages of passing this bill into law, the provision that bans open-pit mining will be scrapped by a bicameral committee. We reiterate our call to President Duterte that he can and he should immediately issue an executive order that puts a ban on open-pit mining,” Garganera said.