Benguet solons seek scrapping of taxes on small-scale gold mining

Ronald Cosalan

Representative Ronald Cosalan. PHOTO from www.congress.gov.ph

MANILA, Philippines—Two lawmakers from gold-rich Benguet province want to remove taxes on gold extracted by small-scale miners to curb the smuggling of the precious metal out of the country.

The removal of excise and income taxes on gold from small-scale operations will encourage miners to sell their gold to the Bangko Sentral ng Pilipinas rather than in the black market, according to Representatives Nicasio Aliping Jr. of Baguio City and Ronald Cosalan of Benguet.

The two congressmen have filed House Bill 4951, which seeks to amend Sections 32 and 151 of Republic Act 8424, or the National Internal Revenue Code, as amended, exempting small-scale miners from taxation.

The proposed law will promote the “accumulation of gold resources and the sale of gold to the BSP,” as mandated under Section 17 of Republic Act 7076, or the People’s Small-Scale Mining Act of 1991, Aliping said in a statement.

That law requires that all gold produced by small-scale miners anywhere in the country be sold to the BSP at competitive prices regardless of volume or weight.

But taxes levied on gold discourage small-scale miners from selling their gold to the BSP, and they would rather trade on the black market. From the black market, the gold is smuggled out of the country, Aliping said.

Under the Tax Code, proceeds of gold sold to the BSP are charged a 5-percent creditable withholding tax, and a 2-percent excise tax based on the gross sales of gold.

In 2011, the Bureau of Internal Revenue tightened its collection of taxes by putting desks at all gold-buying sites of the BSP; thus those selling gold to the BSP could no longer avoid paying taxes.

As a result, there has been a significant plunge in the BSP’s purchases of gold in 2012 and 2013 compared with 2011, Aliping said.

“From the 554,994 fine troy ounces of gold purchased by the BSP in 2011, its purchases drastically dropped to only 32,888 fine troy ounces in 2012, and down further to a measly 17,778 fine troy ounces in 2013,” said Aliping.

Cosalan said any depletion of the BSP’s gold inventory would affect monetary stability and the convertibility of the Philippine peso.

“The banking and credit system will consequently suffer to the detriment of the economy,” he said.

The bill is pending in the ways and means committee chaired by Marikina Rep. Miro Quimbo.

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