Legislator says fiscal regime for mining awaiting clearer government direction

ANY CHANGE in the mining industry’s fiscal regime will only create “confusion,” given the uncertain policies coming out of the Environment department, a legislator said.

“I think until such time that we get a clear-cut direction on what the administration wants from mining, I think it’s going to be difficult to implement or even propose a policy regarding revenue (sharing) with the mining industry,” said Deputy Speaker Romero Federico S. Quimbo in a phone interview on Friday when asked if legislators will go forward with a mining revenue-sharing scheme.

“It will only add confusion at this point if we do that. Until that decision is made, I think everything is going to be superfluous or even useless,” he said.

The mining revenue sharing scheme — which was authored by Mr. Quimbo in the previous Congress after it was proposed by the interagency Mining Industry Coordinating Council (MICC) — aims to increase the government’s take from mining operations.

“Do they want to terminate existing mining agreements? Do they want to encourage it? And I think those are more essential or threshold questions that need to be answered by the executive (branch) even before we take up revenue measures in Congress,” he added.

Before she was rejected by the Commission of Appointments, Secretary Regina Paz L. Lopez ordered 23 of 41 metal mines shut down, while suspending five more — based on the department’s audit in July that found the miners to be violating environmental management standards.

President Rodrigo R. Duterte said earlier that while he would not agree to Ms. Lopez’ wish for a “mine-free” Philippines, he supported her move to be “strict” with miners.

Meanwhile Ms. Lopez’ successor — former Armed Forces chief of staff Roy A. Cimatu — said he is open to responsible mining and open to reversing the moratorium on new mining contracts, although he needs to review the directives of the Department of Environment and Natural Resources (DENR) before making policy changes.

Finance Secretary Carlos G. Dominguez III said in mid-March that the Department of Finance (DoF) will include the new fiscal regime as part of its succeeding packages of the comprehensive tax reform program.

Meanwhile Finance Undersecretary Karl Kendrick T. Chua, the head of the DoF’s tax reform team, also said that the DoF will include a mining revenue scheme in “future package[s],” without elaborating.

“There’s no details yet. Still studying,” said Mr. Chua in a mobile phone reply on Friday when asked whether the DoF will stick with the version proposed by the previous administration.

In February 2015, the House ways and means committee filed House Bill No. 5367 where the government, as owner of the minerals, would get a 10% share of gross revenue or 55% of adjusted net mining revenue (ANMR, or gross revenue less production and other deductible costs “but not to exceed 10% of direct mining, milling and processing costs”), whichever is higher — in lieu of corporate income taxes and other local fees.

In case the ANMR margin (ANMR divided by gross revenue) exceeds 50% “due to increase in metal prices or other factors,” the government gets 55% of the threshold ANMR (50% of gross revenue) plus 60% of the excess.

Sought for comment, Budget Secretary Benjamin E. Diokno said: “It’s a pity that we’re not utilizing that because mining has become an underperforming sector. I know ( the policy uncertainty is) holding back the industry,” in a chance interview on the sidelines of the BusinessWorld Economic Forum last Friday.

“That’s a different issue with the change in leadership. We will implement all the mining laws for now,” added Mr. Diokno noting that the taxation scheme has yet to be discussed together with the economic team.

Socioeconomic planning Secretary Ernesto M. Pernia said: “Well, whatever is good for government,” in a chance interview in the same forum.

The Chamber of Mines of the Philippines previously opposed the proposal, saying that such a tax policy would negate efforts to attract investment to boost the economy.

House Bill 5367 in the previous Congress did not reach plenary deliberations because time ran out, according to Mr. Quimbo.