Bantay Kita, a governance and fiscal reform coalition, lauds Senator Joel Villanueva for filing Senate Resolution No. 612 directing the Committee on Public Information to conduct an inquiry on beneficial owners of mining, oil, gas, and coal companies. By doing so, it could be determined if companies abide by foreign ownership restrictions. A similar issue was raised about Rappler, an online news network, for allegedly violating the equity restrictions imposed by the Constitution on mass media ownership.
According to Bantay Kita Coordinator Tina Pimentel, “The Resolution is timely since the Philippines, as a participating country in the Extractive Industries Transparency Initiative (EITI), is required to establish a Public Beneficial Ownership Registry for extractive entities by 2020.”
EITI is a global standard of openness in mining, coal, oil and gas. The Initiative asserts that improved governance will ensure that proceeds from resource extraction will contribute to economic growth and social development. The Philippines expressed its commitment to join the EITI in 2012 through Executive Order 79.
According to Senate Resolution 612, the proposed Public Beneficial Ownership Registry will not only identify individuals who ultimately control extractive companies but will also disclose their nationalities. This will help determine if entities abide by prescribed ownership restrictions. The said Registry will also aid in increasing trust and accountability, improving investment climate, and preventing corruption, among others.
“As government looks for ways to increase taxes to support initiatives like the Build, Build, Build program, ownership disclosure will make it easier to track tax evaders. This can potentially make tax administration easier and raise collection.” Pimentel added.
The Secretary of Finance has issued Revenue Regulations (RR) No. 1-2018 dated 5 January 2018 to provide for the Revised Tax Rates on Mineral Products pursuant to the provisions of the Tax Reform for Acceleration and Inclusion (TRAIN) Law for the purpose of amending RR No. 13-94 which governs the imposition of excise tax on minerals and mineral products.
The revised tax rates are as follows:
Coal produced under Coal Operating Contracts entered into by the government pursuant to Presidential Decree No. 972 as well as those exempted from the excise tax on mineral products shall be subject to the applicable rates above beginning 1 January 2018.
For indigenous petroleum, “first taxable sale, barter, exchange or similar transaction” refers to the transfer of indigenous petroleum in its original state to a first taxable transferee.
“Gross output” is generally interpreted as the actual market value of minerals or mineral products, or of bullion from each mine or mineral lands operated as a separate entity without any deduction from mining, milling, refining, (including all expenses incurred to prepare the said minerals or mineral products in a marketable state), as well as transporting, handling, marketing, or any other expenses.
You may access the full version of the Regulation through the website of the Bureau of Internal Revenue. Click here to read.
Bantay Kita strongly condemns the death of seven (7) members of the Indigenous Peoples T’boli-Munobo S’daf Claimant Organization (TAMASCO) during an anti-insurgency military operation in Barangay Ned, Lake Sebu, South Cotabato, Mindnanao, on December 3, 2017. TAMASCO tribal chieftain Datu Victor Danyan, his two sons Tantan, Jr. and Artemio, and son-in-law Dodoy were among the casualties.
Known to the National Commission for Indigenous Peoples, local government, and the Philippine Army as a staunch advocate the tribe’s land rights Datu Victor had been engaging in government processes and multi-stakeholder platforms since late 1990s. As TAMASCO chieftain, he had made known his tribe’s staunch opposition to the coffee plantation operated by Silvicultural Industries (SII), a subsidiary of David M Consunji, Inc. (DMCI). SII had been awarded Integrated Forest Management Agreement (IFMA) 22 which would have expired in December 2016. IFMA 22 covers about 11,000 hectares.
TAMASCO’s ancestral domain encompasses land in South Cotabato and Sultan Kudarat, two provinces that share a political boarder. TAMASCO claims another agreement (IFMA 22-2007) which integrates and effectively extends IFMA 22, did not seek Free Prior and Informed Consent (FPIC) from the tribe. FPIC is a crucial step that allows the IPs to decide to allow or prevent the implementation of a project within their ancestral domain. Both IFMAs pertain to areas in Sultan Kudarat. IFMA 18-2007 was awarded to M&S Company, another DMCI subsidiary. It should be noted that of the approximately 29,000 hectares granted under IFMA in Sultan Kudarat, over 25,000 hectares has been conferred to DMCI subsidiaries.
Through recent negotiations with government, TAMASCO alleges that it had been given the right to carve out 300 hectares of its ancestral domain from the prevailing IFMA. This had yet to be implemented. Meanwhile another DMCI subsidiary, DMC-Construction Equipment Resources Inc. (DMC-CERI) had been awarded a Coal Operating Contract (COC) in the area. To date, San Miguel Energy Corporation has a pending application that would also impact the TAMASCO ancestral domain.
Through, multi-stakeholder engagements and available government platforms and processes, TAMASCO had openly opposed these projects in their desire to have control over their ancestral domain.
Bantay Kita is deeply concerned that killings of advocates like Datu Victor Danyan are legitimized by military operations under the blanket of martial law prevailing in Mindanao. We demand for a fact-finding mission to uncover the truth and work towards ensuring that civic space is not threatened by such atrocities.
Bantay Kita demands that the Government uphold the fundamental freedoms and provide safe spaces to express, organize and affiliate.
Bantay Kita commends the bicameral members for increasing the excise tax on mining companies from 2% to 4% in the Tax Reform Acceleration and Inclusion (TRAIN) Bill. But the coalition of natural resource governance advocates asserts, it is still not sufficient.
“This is a good start, but it is still low. In addition, we urge legislators to consider collecting royalties from all mining operations, not only those that operate within mineral reservation areas.” Bantay Kita National Coordinator Tina Pimentel expressed.
Bantay Kita recommends imposing 5% mineral royalty payments for all mining operations based on market value of gross output. The current fiscal regime imposes 5% royalty payments only to mining operations situated in mineral reservations. To date, only four provinces have been declared by government as mineral reservations: (1) Zambales in Central Luzon, (2) Surigao del Norte, (3) Surigao del Sur, and (4) Dinagat Islands in the CARAGA Region. About 40% of large scale metallic mines operate within mineral reservations.
Ms. Pimentel further asserts, “All mining operations in areas within the Philippine jurisdiction should be subject to royalty payments in order for the country to increase its benefits from resource extraction. Minerals are finite and once extracted, we only have one opportunity to benefit from it. Based on the 2016 PH-EITI Report, Php 2 billion was collected from large scale metallic mines as royalty from mineral reservation areas. Had all mining companies been levied this tax, we would have collected an estimated P4.5Billion from large scale metallic mining operations.”
Bantay Kita is also advocating for the imposition of windfall gains tax and scraping of all unnecessary incentives accorded to mining companies. Windfall gains tax gives the government an opportunity to earn more when mineral prices are on the rise. Fiscal incentives are considered forgone government revenues. Bantay Kita estimates that from income tax holidays accorded to large scale metallic mines alone, the government has lost an estimated Php 5 billion in revenues for 2014.
Bantay Kita also urges the legislators to maintain the corporate income tax rate imposed on mining companies, given that their contribution to the country’s GDP remains insignificant.
Bantay Kita is hopeful that other mining fiscal reforms be included in the next comprehensive tax reform package.
The administration is designing a new comprehensive tax reform known as TRAIN or Tax Reform for Acceleration and Inclusion (SB 1592) which includes reforms in the mining fiscal regime. Mining has failed to contribute significantly to government revenues. Based on figures reflected in the 2016 Ph-EITI Report, large scale metallic mines have contributed 1.1% to GDP. It is timely that TRAIN includes reforms in the mining regime to increase government share from the extractive industry.
TRAIN proposes increase in excise tax from 2 percent to 4 percent based on market value of gross output. While other revenue streams remain, royalty payments in mineral reservations at 5 percent, indigenous people’s royalty at 1 percent, and 30 percent of net taxable income as corporate tax.
Bantay Kita recommends imposing 5 percent mineral royalty payments for all mining operations based on market value of gross output. The current fiscal regime imposes 5 percent royalty payments only to mining operations situated in mineral reservations. To date, only four provinces have been declared by government as mineral reservations: (1) Zambales in Central Luzon, (2) Surigao del Norte, (3) Surigao del Sur, and (4) Dinagat Islands in the CARAGA Region. The government should maximize its gains from mineral resources. Extracting minerals is a one-time opportunity to improve people’s lives.
The effective tax rate (ETR) is the percentage of government’s share from total profits before tax.
While, the average tax capture (ATC) is percentage share of government payments in gross value. With TRAIN and imposing the 5 percent royalty to all mining companies gives an ETR for all commodities and sites and ATC, 46% and 19% respectively.
Using actual figures from the 2016 PH-EITI Report, the increase in excise tax from 2 to 4 percent, and imposition of 5 percent royalty on all mining operations will provide the government additional Php 4.3 billion.
Bantay Kita through the Making All Voice Count (MAVC) implemented a project to improve indigenous peoples’ (IP) capacity to utilize their rights to manage resources in the ancestral domain (AD).
The project assisted the CAMMPACAMM Manobo Tribal Community of Rosario, Agusan del Sur to update its Ancestral Domain Sustainable Development and Protection Plan (ADSDPP) and formulate a Community Royalty Development Plan (CRDP). The ADSDPP is a 5-year compendium of all IP plans within an Ancestral Domain. In the creation of a CRDP, the ADSDPP must be considered. The CRDP serves as a roadmap for allocation and investment of royalties. The Manobo Tribal Council of Rosario acknowledged the need for a development plan that would chart how the tribe’s future generations would benefit from royalties received from extractive investments in their ancestral domain. It was evident that they recognized the inter-generational right over resources.
In order to update the ADSDPP and prepare a CRDP, the IP group mapped out their area to locate on-going investments and identify areas for development within their AD. The mapping was facilitated by the local government through the introduction of innovative community-based mapping techniques.
Bantay Kita hopes to replicate this project with other indigenous communities who are facing similar of resource management challenges within their ancestral domain. Knowledge products produced in through the project are available online and will be disseminated, where needed, to indigenous communities affected by mining operations around the Philippines.
The project was made possible through partnerships with local non-government organizations led by the Foundation for the Development of Agusanons Inc (FDAI), the National Commission on Indigenous Peoples and the local government spearheaded by the provincial Government of Agusan del Sur.
View the knowledge products of this project:
Bantay Kita strongly denounces all forms of human rights violations. In solidarity, we stand with the Cordillera Peoples Alliance (CPA) and its network in asserting their rights and opposing any form of discrimination.
It is distressing to note that the CPA and its network have been targets of harassment over the past months. The Cordillera Peoples Alliance is committed to the promotion and defense of indigenous peoples’ rights, human rights, social justice, and national freedom and democracy.
CPA Chair Windel Bolinget, Vice Chair Xavier Akien and a staff of the Center for Development Programs were harassed by the Philippine National Police (PNP) while on their way home to Baguio after a community meeting with a local partner organization in Quirino, Ilocos Sur - Save Quirino Movement (SQM).
Five women activists from legitimate organizations from the Cordillera were charged with trumped up cases, while another woman activist is consistently maligned by the Armed Forces of the Philippines (AFP) Northern Luzon Command.
The PNP also raided the home of farmer-pastor Eugine Antonio in Abra province, and seized documents belonging to Mudiit Peoples Organization, a local people’s organization, where Antonio is an officer. Prior to this, Antonio had been receiving death threats after distributing calamity funds he received from the Baclaran Church.
We urgently appeal to the public to condemn the harassment by State security forces that have sworn to protect the rights of the people.
Bantay Kita along with Cordillera People Alliance seeks justice for the violations committed by the PNP and AFP. We demand that the Government promote and uphold the fundamental freedoms of individuals and groups.
PRESS RELEASE: BK urges PH EITI multi-stakeholder group to keep their commitments towards resource management
On October 25, the Philippines hosted the 38th International Extractive Industries Transparency Initiative (EITI) Board Meeting. The Philippines was commended by the EITI International Board for being the first country to achieve the satisfactory progress against the EITI Standard.
EITI is a global standard of governance for oil, gas, and mineral resources.
Bantay Kita (BK), a nationwide coalition of organizations that advocates for transparency and accountability in the extractive industry, lauds the Philippine EITI in its compliance to the Standard.
“We recognize all efforts and participation of the PH-EITI Multi-Stakeholder Group and Secretariat in pursuing improved natural resource governance. It has given access to data and documents that were previously unavailable to the public,” said Tina Pimentel, National Coordinator of Bantay Kita
The Union of Local Authorities of the Philippines, as member of the PH-EITI Multi-Stakeholder Group also recognized the achievement: "EITI has opened an avenue for stakeholders to participate in policy proposals formulation and to keep track of government's progress in implementing reforms. However, the reconciliation and transparency initiative of EITI, as proven effective in improving government systems on extractive industries, should be institutionalized and supported by a concrete legal framework that Congress may enact the soonest possible."
BK notes that advances in natural resource management rooted in the PH-EITI MSG recommendations have been made. This illustrates the PH-EITI’s significance in advancing improved governance in the extractive industry. However, BK acknowledges that more remains to be done for EITI to remain relevant.
Augusto Blanco, Tribal Leader of Kaimunan Lumad sang Compostela said, “EITI can also be a powerful venue for local development moving beyond revenue transparency. It can pursue enhanced environmental and social monitoring to provide a sound basis to discern the full impact of resource extraction.”
He also noted, “Subnational EITI MSGs can be a local platform for constructive engagement of concerned stakeholders (government, civil society, indigenous peoples, and industry) in resource management to ensure that it contributes to sustainable development. EITI also enhances further the empowerment of the indigenous people in the the exercise of their FPIC and sustainable management of their ancestral domains.”
BK urges all members of the PH-EITI MSG, which includes government, industry, and civil society representatives, to keep their commitments and continue forging forward towards improved resource management.
Bantay Kita is a coalition of over 80 organizations nationwide with 60 network affiliates, including Indigenous Peoples Organizations, working towards improved governance of extractive industries. In line with our objectives, we support proposals that amplify the right of communities to equitable revenue share, and safeguard environment and the well-being of people from the detrimental effects of mining operations.
HB 5674 entitled as “An Act Requiring Legislative Franchise as a Pre-Requisite to the Issuance of a Mineral Agreement or Financial and Technical Assistance Agreement“ and HB 6259 otherwise known as “An Act Amending Certain Portions of Republic Act No. 7942 by Prohibiting Mining in Watershed, Requiring a Legislative Franchise for Mining Operations and for other Purposes” propose objectives that are aligned with Bantay Kita’s aspiration to enhance natural resource governance in support of sustainable development
We support the bills objectives as it promotes environmental protection and economic growth. We also commend legislators for pushing greater transparency and accountability in the extractive industries, as well as increased scrutiny of proposed mining operations.
The Philippines is recognized as one of the most mineralized countries in the world. Bantay Kita agrees that proceeds from resource extraction can contribute to economic growth and social development with improved governance and fiscal reforms. We recognize legislators as important stakeholders in managing our country’s natural resources. They should be involved in ensuring that investments made will incur the most benefits for the Filipinos.
We concur with Congress that enhanced evaluation is required to understand the full impact of a mining operation, and serve as a basis for an informed recommendation. In this light, Bantay Kita suggests that Congress directs the executive branch to establish technical parameters for a scientifically proven assessment of mineral potential of an area that would be undertaken along with an appraisal of the economic, social, and environmental impacts an extractive activity will generate. Beyond considering the present and mid-term impacts, we urge Congress to also include the effect of resource extraction on climate change and an area’s vulnerability.
Aside from a more comprehensive data-driven examination of the potential impact of mining operations, Congress may also instruct the executive branch to consider and compare other viable investments in the area. This will be helpful in determining the best option for a site.
We recommend expanding and institutionalizing existing initiatives such as the PH-EITI (Philippine Extractive Industry Transparency Initiative) which is a global standard for transparency of the extractive sector. A national multi-stakeholder group including the government, civil society, and the industry decides how EITI process should work. Recently, the Philippines has been recognized as the first country to achieve satisfactory progress against the EITI standard. A proposal institutionalizing Ph-EITI (H.B. 4116) is pending in Congress. It promotes revenue and contract transparency, accessibility of data and information, and genuine participation of relevant stakeholders in resource governance. Moreover, it ensures oversight in all stages of mine life.
Bantay Kita also advocates for fiscal reforms in mining. To date, taxes, which form the bulk of proceeds received from resource extraction, contributes insignificantly to the economy. The 2016 Ph-EITI Report states that government collected P11.1B from large scale metallic mines. This is 1.1% of the country’s Gross Domestic Product and 0.6% of total government revenues. This may be attributed to the low tax rates and unsuitable tax instruments applied to mining. Moreover, fiscal incentives are also enjoyed by mining companies. We urge Congress to review the current mining fiscal regime and consider modifications that would provide the country, and the communities where mining companies operate, a fair share.
In conclusion, Bantay Kita reiterates its support for proposals to improve natural resource governance that maximize benefits and minimizes losses for the present and future generations.
Bantay Kita commends the Philippine EITI’s compliance to the EITI Standards. Being the first country to achieve the satisfactory progress against the EITI Standard is a milestone. We recognize all efforts and participation of the PH-EITI Multi-Stakeholder Group and Secretariat in pursuing improved natural resource governance.
We acknowledge positive strides towards transparency through the implementation of EITI in the Philippines. It has given access to data and documents that were previously unavailable to the public. It also increased awareness and surfaced questions for public debate and policy recommendations for further advancement of natural resource governance in the Philippines. We have observed enhancement of processes rooted in the PH-EITI MSG recommendations. This illustrates the PH-EITI’s significance in advancing improved governance of the industry.
However, more needs to be done. For EITI to remain relevant, it can pursue enhanced environmental and social monitoring to provide a sound basis to discern the full impact of resource extraction. EITI can also be a powerful venue for local development moving beyond revenue transparency. Subnational EITI MSGs can be a local platform for constructive engagement of concerned stakeholders (government, civil society, indigenous peoples, and industry) in resource management to ensure that it contributes to sustainable development. Empowerment and inclusivity of local stakeholders are significant to local natural resource governance.
We urge all members of the PH-EITI MSG to keep their commitments and continue forging forward for improved resource management. For reporting entities, we call for greater disclosure of timely, comprehensive, disaggregated, relevant data that can contribute to analysis for reforms. To the industry, we enjoin the participation of additional large scale metallic mining companies. We welcome the participation of non-metallic large scale mines. We demand that Semirara Mining and Power Corporation, the only material coal company to participate in EITI; it has not done so. To regulatory agencies, we appeal that they exercise your function over the industry’s they oversee. For the DENR, we expect the Department to carry its mandate to implement DAO 2017-07, which compels the participation of all mining contractors in EITI. We appeal to government entities to accelerate the pace of governance reforms.
May PH-EITI remain relevant and achieve its objective of improving natural resource governance so that proceeds from extractives may benefit all. In this light, we also urge the passage of the institutionalization of EITI.