House-proposed state levy of 60% of mining revenues bucked

The Chamber of Mines of the Philippines (COMP) said the proposed mining fiscal regime approved by a House of Representatives panel—which proposes a state levy of 60 percent of mining firms’ net revenues —runs contrary to the government’s pronouncement of support for the industry.

In a statement, the COMP said  the mining tax bill recently passed by the House ways and means committee would “once again set back the revitalization of the industry, contrary to pronouncements of the new administration.”

Under the proposed measure, firms will pay a 5-percent royalty tax on all large-scale mining operations and a 10-percent export tax on the gross value of mineral ores, as well as a minimum government share of 60 percent on net mining revenues.

COMP said that not only would the tax bill again put into question the stability of polices governing the mining industry, which is described as “most detrimental to attracting foreign investments in such a capital-intensive industry,” but would also drive away investors.

“Foreign investors will simply look elsewhere; we are not the only country blessed with mineral resources. If further tax increases are unavoidable, the tax structure should not be onerous as to stop investments from coming in,” the group said.

“This will sustain existing mines and encourage quality investments in the hugely untapped Philippine minerals sector, ultimately expanding considerably the tax base and providing far larger tax revenues to government,” it added.

COMP is urging Congress to revisit the draft legislation as no consultations with stakeholders took place that would have allowed them to provide inputs to help the government attract investments and unlock the industry’s economic potential.

This would also give them an opportunity to prove the “onerous provisions of the bill” would make the taxes in the country’s mining industry one of the highest worldwide, the group added.

“We also maintain that figures shown during the committee hearing that purported to show the industry’s effective tax rate at 38 percent was woefully out of date as such report was done in the year 2000, prior to the doubling of the excise tax on mineral products under Tax Reform for Acceleration and Inclusion 1,” it said