The Chamber of Mines of the Philippines (COMP) said a bill raising taxes on mining will once again set back the revitalization of the industry, contrary to pronouncements of the new administration.
COMP described as onerous the consolidated bill approved last Wednesday by the House Ways and Means Committee, raising the effective tax rate on mining to 51 percent from the current 38 percent.
The final proposed law consolidated House Bill (HB) 373 introduced by Joey Salceda, committee chairman and Albay, second district representative ; together with HB 2246 of Rep. Stella Quimbo, Marikina City’s second district ; HB 3888 of Rep. Lex Colada of AAMBIS-OWWA Partylist; and HB 2014 jointly authored by representatives Ray Villafuerte of Camarines Sur second district, Miguel Villafuerte, Camarines Sur fifth district and Tsuyoshi Horibata, Camarines Sur first district and Rep. Nicolas Enciso of Bicol Saro Partylist.
“We lament the fact that no consultations took place with the industry that would have allowed us to prove that the onerous provisions of the bill would make the Philippine mining industry one of the highest taxed in the world,” COMP said in a statement sent to media on Friday.
The group also belied claims the effective tax rate at 38 percent is “woefully out of date as such report was done in the year 2000, prior to the doubling of the excise tax on mineral products under TRAIN (Tax Reform for Acceleration and Inclusion) 1,” the group added.
Salceda said the increase will raise additional P37.5 billion revenues in just the first full year of its implementation.
Other key provisions of the proposed bill call for the implementation of a 5 percent royalty tax on the market value of gross output of large-scale mining operations; a minimum government share of 60 percent of net mining revenues, including all taxes and charges; and a 10 percent export tax on the market value of mineral ore exports to encourage domestic processing of mineral products.
COMP said this “drastic policy change” will not be conducive for the growth of the mining industry.
“Should this bill become law, three flagship mining projects that can otherwise substantially contribute to economic development in areas where they are located, result in a substantial amount of exports and tax revenues and a considerable amount of social expenses will instead be in jeopardy. In addition, a number of large-scale operations run the risk of closure, resulting in massive unemployment in their areas of operations,” COMP said.
The mining group also said that the proposed law will be “detrimental” in attracting foreign investments in a capital-intensive industry.