Higher taxes from mining seen under Cimatu
Although he already said that he will wait until the end of the year before he will formally announce any policy shift in the mining sector, Environment Chief Roy Cimatu has been giving hints as to how the future will look like for mining companies in the Philippines during his term: Higher taxes.
Aside from imposing higher tax on mining operations, the sector may also see the implementation of measures that will increase the required rehabilitation funds for miners; and possibly, work on a law that will determine whether the country will allow open-pit mining method or not in the future.
Environment Undersecretary for Policy, Planning and International Affairs Jonas Leones said that Cimatu is now seriously looking at the current fiscal regime at the mining industry and how it could be improved.
"We are really looking at the fiscal regime. The contribution that the mining industry is giving the government is very minimal. So we have to look at it. We need to revisit the law and require the mining companies based on that provision to increase their share," Leones said in an interview.
As of now, the Philippines is the fourth most mineralized country in the world and yet, the local mining sector's annual contribution to the Philippine gross domestic product (GDP) over the past seven years had even failed to go beyond 0.7 percent.
At previous market prices, the country's untapped mineral resources are estimated to be worth around P73.47 trillion. In a Palace news briefing last week, Cimatu reiterated that government must get more share in the revenues of mining companies by imposing higher excise tax on them.
Based on an earlier computation made by Chamber of Mines of the Philippines (COMP), the organization emphasized that the assumption that the government only gets 18 percent from mining operations and that it only earns P40 billion from the revenue sharing scheme with miners is "completely false." According to COMP, a Foreign Technical Assistance Agreement (FTAA) between the government and a mining group provides for a 50-50 percent sharing formula, and that the government should get an additional share of 60 percent when the windfall profit is over 50 percent.
In the Mineral Production Sharing Agreement (MPSA), on the other hand, the government gets a 45 percent share, depending on prices of commodities. When the prices are low, government should still earn more than the companies.
In general, the government imposes a two percent excise tax on miners based on the gross value of minerals. This is on top of the corporate income tax and fees for local government units.
Cimatu could not yet say by how much he wants to increase the excise tax, mentioning that other countries even collect an excise tax of 10 percent excise tax from mining companies.
Right now, Philippines is currently the leading producer of nickel, a significant producer of gold and copper, and exports some iron ore, chromium, zinc and silver.
Last week, Leones also said the government is now looking at increasing the rehabilitation funds that are required of miners as well as come up with a policy that will oblige them to do progressive rehabilitation while their operations are still on-going.
Under the Philippine Mining Act, a Mine Rehabilitation Fund (MRF) shall be deposited as a trust fund in a government depository bank and shall be used for physical and social rehabilitation of areas and communities affected by mining activities and for research on the social, technical and preventive aspects of rehabilitation.
To recall, Cimatu also said earlier that a new law or amendments to Philippine Mining Act "will solve everything" with regards to the debate on whether open-pit mining should be allowed or not in the country.
Before she left the Department of Environment and Natural Resources (DENR), Lopez eventually placed a ban on the use of the open pit mining method for the extraction of copper, gold, silver and complex ores in the country.