Per commodity tax increase in mining eyed

A new fiscal regime in mining is finally on the way and the government is now keen to impose different tax adjustments per mineral commodity just like the earlier proposal of the Mines and Geosciences Bureau (MGB).

As early as last year, MGB, the government agency tasked to regulate the highly scrutinized mining sector, already floated the idea of a per commodity basis tax increase in the extractive industry.

MGB Director Wilfredo Moncano earlier said that now that the administration is serious in implementing a mining tax hike — which can pave the way for the much awaited growth in the sector — the increase should not be uniform and that each commodity such as gold, nickel, and copper should have its own tax adjustment.

As of now, the Philippines is the world's top nickel producer, while it also exports gold and copper. The country's untapped mineral resources are estimated to have a combined value of over $1 trillion.

Finance Secretary Carlos Dominguez III said that MGB's proposal "makes sense."

"You don't tax nickel at the same rate as you tax copper. First of all, the extractive costs are different and secondly, the values are different," Dominguez told reporters on Friday night.

The fiscal regime on the mining industry hopefully be included in package two of the government’s comprehensive tax reform package (CTRP).

It was supposed to be part of the Tax Reform for Acceleration and Inclusion (TRAIN) law, the first package of CTRP that took effect in January 1, but there are still some aspects of it that have to be resolved through the Mining Industry Coordinating Council (MICC).

"[Package] 2 plus is a collection of unfinished businesses so the tax on coal and casino is already included in package 2 because we still have to review what was taken out in package 1. And then in mining, we have to wait because we have to go through the MICC process," Finance Undersecretary Karl Kendrick Chua said.

Under the Senate version of TRAIN, which was signed by President Rodrigo Duterte before the end of 2017, excise taxes on metallic and non-metallic mining resources should go up from 2 percent to 4 percent.

According to Dominguez, it is going to be discussed at the MICC, which he co-chairs with Environment Secretary Roy Cimatu, whether to include this in package 2 of CTRP or propose a separate measure on mining tax alone.

"If ever there would be a delay in the submission of [CTRP's] package two, that would only be the provisions on mining – not the entire package," Chua said.

"[We are thinking] should we delay it [the submission of package 2] or just file another mining tax," Dominguez added.

Cimatu earlier said he is now looking at a study proposing to increase the excise tax in mining from 2 percent to 5 percent. (MBM)