Recently, finally, after some two years of indecision, mixed with uncertainty, the Aquino (Part II) administration sprang an amazing proposal upon the beleaguered mining industry: Just give to the government 50 percent of your gross income as tax payment.
According to the Department of Finance, such a tax rate would apply exclusively on mining firms with “financial-technical assistance agreement,” or FTAA, with the government. In other words, the target of such a punitive rate would only be large-scale mining, as against small mining controlled by LGUs, which never follow any government environmental guidelines at all.
As a result, the mining sector was quickly abuzz with questions, basically wondering about this one and only one thing: Was the 50-percent imposition only a tax policy tic or was this administration really serious?
In the past four years, anyway, the administration simply allowed “no”—as in “nada”—new big mining project to operate in this country where, according to the latest official survey of the government, almost 30 percent of the population were poor. By coincidence, four years ago was also the time our leader Benigno Simeon (aka BS) became president, and based on sentiment in the legitimate mining sector, his administration did not seem to care about the industry at all.
First, our leader BS issued his famous EO 79, basically stopping the issuance of new mining permits until Congress has passed a reform law on the “revenue-sharing scheme” between the government and mining companies. Until today, two years after the famous EO came out, Congress still does not have even an iota of an idea on how to start crafting the law on the new sharing scheme, because the initiative on the whole darn thing must come from the Executive.
And so after two years of dribbling the issue around, the administration floated the revenue-sharing proposal of 50 percent of gross income to the mining companies. Whether or not the administration was serious is still under debate. Anywhere else in the world, however, the governments always look at any mining venture as a partnership with the investors—you know, those absorbing the billions of dollars worth of risks. After all, if the project fails, the investors lose their shirt, while the government simply gets back the mining rights for sale to another “partner.”
To think, even the boys of leader BS agreed that the mining industry could be one of the main drivers of the Philippine economy, creating immense wealth for the country, not to mention direct jobs in the mines and in those of the hundreds of support industries.
Look, boss, the government told us that we have proven mineral deposits worth at least $850 billion—or about P38 trillion. Also, we are supposedly ranked among the top 5 countries in the whole world in terms of mining “potential” primarily because we have some 9 million hectares of mining areas. According to government statistics, less than 2 percent of those areas have mining permits. Well, investments in mining already slowed in the last three years, which was blamed on indecisiveness of the Aquino (Part II) administration.
Official figures thus showed that investments last year reached $790 million, compared to $810 million in 2012 and $1.15 billion in 2011. In short, mining prospectors are losing interest in this country. No wonder, despite its rich mineral deposits, the Philippines has pathetically low mineral exports compared to its neighbors, and it beat only the likes of Vietnam, which perhaps stirred this former Cabinet member to comment: “What’s killing the mining industry slowly are government inaction and policy uncertainty.”
Moreover, current taxes on the industry already include 2-percent excise, 5-percent royalty, 30-percent corporate income tax, plus a host of other business and real property taxes, while at the same time the mining sector must contend with the so-called revolutionary taxes imposed by the New People’s Army, or the NPAs. You know, the mining sector actually must bear what was tantamount to double taxation! The military already admitted that mining operations, whether legal or illegal, have become among the big sources of funds for the NPA. At the same time, the NPA supposedly came out publicly with a warning to mining firms to stop their operations in Mindanao—or else…
The military cited as an example the recent NPA raid on the mining site of Philippine Alstron Mining in Agusan del Norte.
Last year, a well organized big group of some 300 NPA guerrillas raided three mines in Claver, Surigao del Norte.
According to reports, other targets in Mindanao included the operations of SAGCL, Glencore-Extrata, Philco, Dolefil, Del Monte, Sumifru, and TVI Resource Development Philippines.
Why did the NPA step up their attacks against mining companies? Well, for one, they seemed to be riding on the anti-mining sentiments of the Aquino (Part II) administration, on the ground that mining—even as an inescapable economic activity—was destructive to the environment.
It is just that, if mining is really bad to the minds of the Aquino (Part II) administration, and perhaps even the NPA, if mining is destroying the environment, why is mining just fine and dandy as long as the mining companies pay the “right” taxes—i.e. 50 percent of gross for the administration, and the unspecified amount of “revolutionary tax.”
Here was the reaction from Malacañang to the NPA raids on mining projects in Mindanao: The public can be assured that the government is on top of the situation and that this will not deter this administration from luring investors into the country. Wow!
There—what the administration has inflicted upon the mining sector—the ban on new operations for instance and the ongoing inaction in Congress on the “sharing scheme” and all that—was its version of “luring investors into the country!”