MANILA, Philippines—The mining industry on Monday expressed its opposition to a five-percent royalty the government plans charging mining firms, saying that this would make the country less desirable to investors.
Officials of the Chamber of Mines of the Philippines (CoMP) said the proposal of the Department of Environment and Natural Resources (DENR) to hike fees charged mining firms would put the Philippines in a bad light before big foreign investors.
In particular, the group rejected Environment Secretary Ramon Paje’s proposal to have them pay a royalty fee in areas that would be declared mineral reservations.
The DENR chief announced earlier that he had asked the President to declare 21 mine sites as mineral reservations, which means that products from these sites would be considered of “strategic” value to the country. As such, firms operating in these sites would have to pay a royalty of five percent to the government.
Philip Romualdez, president of CoMP, said imposing a royalty fee on the mining sector would be too much as the Philippine government already got the biggest share from mining firms’ incomes compared to other regions.
Data from CoMP said the government gets 41 percent of the mining firms’ income before taxes. In Africa, the share of governments from mining revenues on average is 34.4 percent, while in Latin America it is 39.5 percent.
“The additional taxes would make the Philippines an undesirable investment for local and foreign mining interests,” Romualdez said.
CoMP’s reaction came on the heels of Paje’s statement on the mining industry. Paje said he had proposed to President Aquino several reforms in the mining sector to optimize the government’s control over the country’s mineral resources, noting that the excise tax mining firms paid to the government was small compared to their production value.
Claims on abandoned mines
Aside from the royalty fees and the declaration of mining reservations, the DENR also suggested additional fees for mining applicants and urged the government to stake a claim on abandoned mines and wastes.
Romualdez also rejected Paje’s observation that the tax contribution of large-scale mining firms was measly.
While he noted that mining activities in the country amounted to P175.24 billion, more than half of the value came from processing plants that are exempt from the 2-percent excise tax.
If the government wants to collect more revenues from miners, it should run after small-scale mining firms, Romualdez said.
He noted that the small-scale mining industry, which mines most of the gold in the country, do not pay excise taxes and other fees to the government. They are also environmentally unsound and unsafe to miners, Romualdez said.
The government should impose a moratorium on small-scale mining pending the creation of a mechanism for tax collection and regulation, Romualdez said.
“The government needs to crack down on illegal and small-scale mining. It should collect the revenues from them that everybody has to pay,” he added.
CoMP said it was not averse to some reforms proposed by the DENR.