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The Current Fiscal Regime Does Not Provide for the Adequate and Equitable Payment by Mining Companies – VILLANUEVA

 

Senator Joel Villanueva has filed a bill which seeks to increase the public share from the mining industry by reforming the mining fiscal regime and mandating transparency in the extractive sector.

Villanueva’s Senate Bill No. 1166 or the “Maximizing Benefits from Mineral and Mineral Products and Quarry Resources Act” requires companies to pay royalty for all the mineral mining operations in the government.

“It is the Filipino people who are the inherent owners of the country’s extractive resource. The public deserves nothing less than our fair share from the use of these resources. The country’s current fiscal regime does not provide for the adequate and equitable payment by mining companies for the extraction of minerals. It is high time we correct this,” Villanueva stressed.

Mining companies are required to pay royalties on top of the corporate taxes and fees they paid as business enterprises. However, not all mining companies are required to pay taxes under the current system. In 2015, royalty payment amounted to only 1.21% of the estimated total value of mineral industry in the same year.

“While we recognize our benefits from the industry, we also cannot deny the negative social and environmental impacts of mining operations in the country. These are costs that the mining industry needs to account for to make sure we are not at the losing end in allowing private companies to use our resources,” Villanueva added.

Senate Bill No. 1166 also aims to generate more jobs in the mining sector by encouraging the development of local downstream industry. The bill seeks to do this by taxing the export of raw ore to discourage outflow of unprocessed mineral and encourage domestic manufacturing. Under the proposal, raw ore export will be taxed 20% by 2018, 40% by 2019, and 60% by 2020. The bill also aims to prohibit the exportation of raw ore by 2021 to strengthen the link of mineral extraction to manufacturing in the long-run.

“We need to develop the Philippine downstream industry for minerals and mineral products to help increase the number of local jobs from this sector. To do this, we need to change the mining fiscal regime to create incentives that encourage processing and manufacturing domestically.”

According to Villanueva, data from the Mines and Geosciences Bureau show that mining sector is currently not a huge employment generator, accounting for 234,000 jobs or equivalent to 0.6% of total employment in 2015.

Senate Bill No. 1166 also proposes to increase the share of local government units from the mining proceed from the current share of 40% up to 50%. The bill will also create a Natural Resource Trust fund from the mining revenues, to be used by national and local governments to fund education and health programs, among others.

Aside from the proposed measure, Villanueva also vows to ensure the immediate passage of the ‘FOI for Mining’ bill which he also filed to institutionalize the Philippine Extractive Industries Transparency Initiative (PH-EITI) which acts as an oversight body of the extractive sector.

Amid the recent call of the Department of Environment and Natural Resources (DENR) requiring miners to make tax disclosures in compliance to the PH-EITI, the senator says that the passage of the ‘FOI for Mining’ bill into law promotes transparency by letting the public gain access from the revenue and public benefit of the mining and extractive resources through requiring the extractive industry to publish their tax payments.

The bill also mandates the PH-EITI to disclose all data of material, national and local payments and revenues; make available to the public all concessions, contracts/licenses, agreements and joint ventures of the government; and to publicly release all data, information, reports on the extractive industries that allow the people to freely use, re-use and redistribute them without restrictions.

“We want communities and local government units to get more from mining. What we are advocating is fairness in the extraction of resources through higher taxation, and good governance of the sector. The prioritization of these bills ensures that the present and future generations benefit from these finite resources,” Villanueva stressed.

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