Mining fiscal reforms in TRAIN: Is it enough?

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.
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Bantay Kita is hopeful that other mining fiscal reforms be included in the next comprehensive tax reform package.