Gov’t lost billions of pesos in taxes from small-scale miners

MANILA, Philippines—The government lost at least P2.42 billion in taxes over a two-year period due to small-scale miners who deliberately misstated their tax obligations, the Chamber of Mines of the Philippines (CoMP) said in a statement.

The chamber said that, based on available information, small-scale miners would use “gross production value,” or the actual amount that miners were able to sell their output, instead of “gross output,” or the market value of minerals and mineral products produced per mine.

Gross output should have been the one considered for tax purposes, CoMP said.

In contrast, large-scale mining corporations, particularly members of CoMP, settled in 2008 and 2009 over P1.4 billion in excise taxes alone, based on data from the Department of Environment and Natural Resources and the Mines and Geo-Sciences Bureau, the industry group said.

Aside from the royalty/excise tax on mineral products, responsible mining companies also pay corporate income tax, mine wastes and tailings fees and occupation fees, among others, the chamber added.

“There are tax leakages, and the government must address this. We wish to emphasize that there is no need to impose additional taxes, that those who pay taxes religiously and correctly should not be penalized and that the government should go after those who avoid paying taxes,” chamber president Benjamin Philip G. Romualdez said.

Also, the taxes paid by large-scale mining companies do not seem to reach host local government units in time, Romualdez said. As such, CoMP has proposed that mining companies should be allowed to settle their taxes directly with the host local governments.

“The two- to three-year delay in the remittance to the local government units of their respective shares in the excise tax from minerals has, for many years, been a cause for concern of local officials. The excise tax payments of mining companies go directly to the national treasury, and it takes time before the respective shares of the LGUs concerned are determined and incorporated in the General Appropriations Act,” Romualdez said.

“This explains the skeptical attitude of LGU officials towards the mining industry and their inability to fully appreciate the benefits brought by mining operations to their areas. Ironically, the economic benefits of LGUs from small-scale mining are readily available because it is the LGUs that issue permits to small-scale miners. And yet, being outside the jurisdiction of the DENR, small-scale mining is not properly regulated and pose serious environmental, health and social problems to the localities concerned,” he added.

The chamber official said local authorities have become skeptical of mine operators because of this. As a result, some local government officials have reportedly approved small-scale mining operations that threaten the environment and the welfare of surrounding communities.

CoMP said the term “small-scale mining” is actually a misnomer because the production output from many operators is not really ‘small.’ Many small-scale miners use huge and often smuggled quantities of mercury and cyanide, which are highly regulated toxic substances, for gold extraction, CoMP said.

“They do not have the appropriate treatment facilities for mine wastes and tailings. The deplorable situation in small-scale mining communities all over the country is being perpetrated by unscrupulous financiers, corrupt officials and operators who are able to get away without paying excise and income taxes to the government,” Romualdez said.