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Statement on Hearing of HoR Ways and Means on mining fiscal regime

11/18/2019

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Bantay Kita supports legislative reforms to increase government revenue from the extractives industry. A mining fiscal regime should ensure the greatest possible benefit to support development and well-being of citizens.
 
The government should establish a fiscal regime that is simple, and transparent mainly due to the limited administrative capacity, and weak regulatory capacity on disclosure.
 
We propose imposing 5% mineral royalty payments for all metallic mining operations which will be easier to administer, and by reason of that royalties are payments to the government for the minerals extracted. We support windfall profits tax to ensure revenue to government from excess profit of companies when international prices of resources soar. We support the introduction of new tax measures such as thin capitalization and ring-fencing to control tax avoidance of companies. However, a mining fiscal regime will only be effective and efficient by closely monitoring companies, and sustaining practice of transparency of both government and industry.
 
Bantay Kita welcomes the creation of a Natural Resource Trust Fund. We propose that the Trust Fund shall be governed by a multi-stakeholder oversight body composed of representatives from the government, industry, and civil society. The oversight body shall advise concerned local government units on fund operations. The Trust Fund is subjected to disclosures to the Philippine Extractive Industries Transparency Initiative (PH-EITI). It shall also be consistent with best practices of natural resource trust funds globally.
 
Bantay Kita strongly supports the institutionalization of the PH-EITI. The EITI is the global standard to promote the open and accountable management of extractive resources. In 2017, the Philippines has been recognized internationally as the first country to achieve satisfactory progress against the EITI Standard. The EITI identified that the Philippines has gone beyond the minimum required by the EITI Standard. The PH-EITI must continue its work to improve governance of the extractive industry. We recommend that a portion or share of mining revenues shall fund the PH-EITI programs and activities.
 
Finally, Bantay Kita supports this legislative reform on the mining fiscal regime only for the metallic mining. We believe that a different bill for the non-metallic industry which includes the coal industry should be filed. The Semirara Mining and Power Corporation, the major player in the coal industry do not exhibit any practice of good governance and have remain non-participant in PH-EITI for the past five years.
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