Compostela Valley execs seek cut in gold tax, too
TAGUM CITY, Philippines—Local officials and those in the mining sector in gold-rich Compostela Valley have joined in the calls of some lawmakers to reduce the tax on gold, saying the levy imposed on the metal has hit hard even on small-scale miners.
The 7-percent gold tax is already too much to bear for small-scale miners and small-time gold traders, whose earnings are further chipped away by taxes and fees to local government units, said Franco Tito, the former village chief of gold-rich Mt. Diwalwal, in Monkayo town.
“It’s too much. We pay the barangay and the local government unit. Then there’s tax,” said Tito, a small-scale miner himself.
The former village official said the proposal on gold tax reduction was timely, and that any tax changes regarding the sale of the metal should be known to the mining sector before implementation.
Gold buyers in Diwalwal typically earn P20 to P50 as markup in every gram bought from miners, and at the present price of P2,200 per gram, 7 percent of it, or P154 goes to the 5-percent withholding and 2-percent excise taxes, said trader Rodrigo Enriquez.
Gov. Arturo Uy said he had received numerous complaints from gold traders when the so-called 5-2 tax scheme was implemented two years ago.
“I told them to write a letter (to the BSP) and until now I don’t know if it was already acted upon,” Governor Uy said.
The governor, who used to engage in gold trading before he entered politics, acknowledged the steep taxes imposed on gold has drove traders away from the central bank, luring them to the so-called black market.
“Traders earn just 1 percent. Actually, (gold buying) is not a good business, but due to its being a fast commodity those engaged profit by selling a large volume,” Uy said.
The governor said he agreed on the proposal but believed total scrapping the taxation on gold sold to the central bank could be counterproductive on the part of the government.
He said a 6-percent reduction to the present tax scheme could be a “win-win solution.”
“The government also needs to collect taxes,” Uy said.
He said he was told the gold price fetched by the central bank does not differ much from that offered in the black market.
Attempts by the government to clamp down black markets for the precious metal “could be very hard and almost impossible,” due to the difficulty in locating and zeroing in on these illegal gold markets, the official said.
“(Illegal) gold trading is somewhat discreet, unlike (illegal) logging which is very visible,” he said.
