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Miners dismayed by proposed tax hike

The Chamber of Mines of the Philippines (COMP) has expressed dismay over that the Mining Industry Coordinating Council (MICC) is going ahead with proposed tax hikes “without taking into consideration comments and observations by authoritative third parties.”

The inter-agency MICC was earlier reported to have approved a proposed revenue sharing scheme where the government would take 55 percent of a mining operation’s adjusted net revenue or 10 percent of gross revenue, whichever is higher.

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According to the Department of Environment and Natural Resources, the MICC is said to have submitted this to the Office of the President for concurrence.

“The MICC-proposed tax structure cannot, by any measure, be considered equitable, much less competitive,” the chamber said in a letter to Executive Secretary Paquito N. Ochoa Jr.

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In the two-page letter signed by COMP chair Artemio F. Disini and president Benjamin Philip G. Romualdez, the group said the scheme would not attract investments that are needed to allow the development of the country’s mineral resources in a responsible manner.

“There are other countries with more reasonable tax structures and are equally [if not better] endowed than the Philippines,” they said.

“The results of our financial modeling indicate that the government share under such proposal will be much higher than [those of] large mineral producing jurisdictions such as Canada, Queensland (Australia), Peru, South Africa, Chile and Papua New Guinea,” they added.

The COMP said they have shared this financial modeling with the MICC, but this appears to have been ignored.

Further, the group reiterated that the government’s perception that the domestic mining industry is not paying enough taxes is “premised on the wrong interpretation” of Mines and Geosciences Bureau statistics.”

“The total taxes of P13.4 billion in 2010 over total gross production value of P145.3 billion was 9.2 percent, giving the impression that the industry was paying only a miniscule amount to the government,” the COMP said.

“However, that analysis includes output from small scale gold miners (whose sales to the Bangko Sentral ng Pilipinas is on a ‘no names’ basis), where there are no taxes paid, hence the wrong impression,” they added.

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TAGS: Business, Chamber of Mines of the Philippines, mining, tax hike
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