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House sends proposed mining tax reform back to DoF

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mining
AFP

By Charmaine A. Tadalan
and Elijah Joseph C. Tubayan
Reporters

A PROPOSAL to give government a bigger share in mining revenues goes back to square one, as House Speaker Gloria M. Arroyo on Thursday asked the Department of Finance (DoF) to submit a new draft that would consider inputs from miners.

“I will ask the industry to talk to the DoF… and let the DoF come back with a new draft in three days’ time; otherwise, we do our own,” Ms. Arroyo said at a hearing of the House of Representatives Ways and Means committee meeting.

The panel was scheduled to discuss the still-unnumbered substitute bill that consolidated House Bills 7994 and 422, titled: “An Act Establishing the Fiscal Regime for Mining Industry” and authored by committee chairman Rep. Estrellita B. Suansing of Nueva Ecija’s first district and committee member Rep. Romero S. Quimbo of Marikina City’s second district, respectively.

Ms. Arroyo recalled that when Gloria L. Tan-Climaco, director of Filminera Resources Corp. and member of the Chamber of Mines of the Philippines (CoMP) board of trustees, had approached her “two days ago” to say “that the measure, as you are preparing it, is going to kill the industry,” she told the official: “Do not tell me that. This is an administration measure. Tell it to the DoF.”

“And she said, ‘but I told (Finance Secretary Carlos G.) Sonny Dominguez’ and — listen to this DoF officials — she showed me the text, ‘That is not my priority. That is GMA’s priority,’” Ms. Arroyo recounted, referring to her initials.

“Now, since you’re all here, since it is not his priority — he just stated it verbally — but it is the President’s priority as he (Pres. Rodrigo R. Duterte) said in the SoNA (State of the Nation Address), therefore, we will come up with a mining bill.”

Ms. Suansing then asked DoF officials attending Thursday’s hearing to “Please clarify and inform the Speaker that this is not his (Mr. Dominguez’s) priority officially.”

Sought for comment, Mr. Dominguez downplayed the issue as “a misunderstanding.”

“If the mining (bill) is ready to be passed then we respect House decision to pass it,” Mr. Dominguez told reporters in a mobile phone message.

“Then next priority is (tax) amnesty, [further increases in] alcohol, tobacco, MVUC (Motor Vehicle Users Charge), financial taxes and [uniform] property validation in that order.”

Finance Assistant Secretary Ma. Teresa S. Habitan, who attended the hearing, said in a mobile phone message that Ms. Arroyo’s request was “not an ultimatum, just clarification on the priorities of the bills.”

Asked when DoF will submit a new draft bill, she replied: “Version naman namin ‘yung Suansing bill (is our version).”

Mining tax restructuring was one of the tax reforms the DoF submitted to Congress in late July in hopes of securing legislative approval by yearend, before lawmakers turn their attention to preparations for the May 2019 mid-term elections.

Asked whether the DoF would consider miners’ suggestions to take into consideration the varied cost structures of extracting various ores, Finance Undersecretary Karl Kendrick T. Chua told reporters late Wednesday on the sidelines of plenary House discussions on the DoF’s budget for 2019: “If there are better suggestions, we’ll review and study the proposals.”

“If they want other [schemes], that’s being studied… when there is a proposal its always being studied.”

Among others, DoF-backed HB 7994 proposes a three percent royalty based on the market value of gross output of mines outside mineral reservations in the first three years of the effectivity of the measure, increasing to four percent in the fourth year and then five percent in the fifth year onward, on top of all other national and local taxes.

CoMP has said that the government should first regulate illegal small-scale miners, arguing that they account for bulk of uncollected industry revenues.

Ms. Arroyo said on Thursday that she supports the phased royalty scheme, and that she has “a proposed provision that says ‘open-pit mining, as defined here in this Act, is prohibited and any mining tenement that will not comply with DAO (Department Administrative Order) shall take steps to comply with the DAO within a period allowed by the DENR (Department of Environment and Natural Resources).”

“And within that period, they must pay an excise tax of such and such an amount which is the one you were saying was prohibitive,” she added.

In the same hearing, CoMP Chairman Gerard H. Brimo, chairman and chief executive officer of Nickel Asia Corp., said: “I can categorically say without any doubt, it’s going to dry up investments in the mineral sector and the other problem that we are going to be faced with is that there are some operations — particularly the copper and gold — that are suffering under the current low prices.”