Statement on Committee Report No. 720 on the Proposed Mining Fiscal Regime

Bantay Kita stands strong in opposing Mining Reform House Bill 8937 (Committee Report No. 720), for its deliberate measure to decrease the current mining royalties and shadowy provisions on profit-based royalties and windfall tax design. While the current mining fiscal regime lacks strong accountability measures to ensure human, environmental and economic due diligence within the Philippines’ mining industry, this proposed fiscal regime provides more protection from financial risks of mining companies and decreases wealth shares of mining host communities. 

Beyond the economic externalities of the proposed mining bill, HB 8937 will also lead to the intensification of social, environmental and cultural impacts of extraction upon mining-affected communities. 

Salient features of House Bill 8937 include:

• lower royalty taxes on operations within mineral reservations from 5% to 3%;
• introduces profit-based royalty as opposed to its current output-based structure on operations outside mineral reservations, with a complex multi-tiered structure from 1-5% tax implementations dependent on profit level, and
• introduces profit-based windfall tax ranging from 1-10%. With the high profit threshold proposed, margin-based impositions apply only after companies are secured of at least 35% margins. This provision has effectively replaced mechanisms which ensure governments obtain at least 50% of mining proceeds under Financial or Technical Assistance Agreements (FTAAs) for foreign companies.

The increased complexity within the proposed mining fiscal regime poses detrimental consequences to exacerbating social, environmental and economic inequities across the nation. The proposed tax reforms have the potential to intensify inadequate transparency measures within mineral production and revenue agreements, calling for an increased risk of tax evasion and corruption. 

The Philippine mining sector contributes a minuscule 0.6% to the GDP, with large-scale mining provinces host to some of the nation’s highest poverty incidences. The alleged aim of the proposed fiscal regime is to raise national revenues within the mining industry. However, by alleviating tax burdens for corporations and dispossessing governments and local communities of their revenue share, the proposed tax reforms underline the government’s prioritization of corporate profit maximization at the expense of community livelihoods and critical ecosystems. 

Rapid scale-up of renewable energy remains a primary solution to addressing the climate crisis across nations and within the 2023 Philippine Energy Plan and 2023 Philippine Development Plan. A global and national energy transition from fossil fuels to renewable energy has called for the insatiable demand for critical minerals necessary to produce low carbon technologies. The Philippines is host to the fifth largest nickel reserves, and fourth largest copper and cobalt reserves, globally, which remain the leading raw materials for the production of green technologies. 

Mineral reservation areas are located in Dinagat Islands, Surigao del Sur, Surigao del Norte, Agusan del Norte, Palawan, and Tawi-Tawi, where the majority of the nation’s nickel reserves lie. These areas are host to some of the Philippines’ most biodiverse ecosystems yet remain amongst the most climate-vulnerable and economically marginalized. The decreased government and community shares in the proposed mining bill will challenge the current weaknesses of the government in the implementation of safeguards to protect mining-affected communities from the loss of critical ecosystems, watersheds, and livelihoods resulting from the increasing attractiveness of mining in the Philippines under the proposed mining reform and global transition mineral demand.

The nation is under increasing global pressure to provide the critical minerals necessary for the energy transition, with international and domestic corporations looking to expand transition mineral mining in the Philippines to capitalize on global demands. 

Moreover, the Philippines contributes 0.35% to global greenhouse gas emissions, yet remains amongst the top three nations most vulnerable to climate change. The alleviation of tax burdens remains a financial incentive for domestic and foreign investors to expand rampant mining operations in the Philippines. Increases in mining operations alongside a lack of human and environmental rights due diligence will lead to the continued devastation of critical climate mitigating ecosystems, leaving mining affected communities - and the nation as a whole - increasingly vulnerable to natural disasters, livelihood loss, and food insecurity. 

​Bantay Kita calls on the Congress to uphold public interests and reject House Bill 8937.