Local and foreign mining companies slammed Tuesday a proposed increase in taxes as contained in a proposed executive order, saying they will render the Philippines uncompetitive as a venue for top-grade mining investors.
The Chamber of Mines said the recommendation to increase the excise tax on minerals and the imposition of an additional “super profit tax” was based on an erroneous premise.
“Our own research shows that other mining-intensive countries such as Chile, Australia, Indonesia, and Vietnam had lower or comparable tax rates than those currently imposed by the Philippine government,” the chamber said.
The group said large-scale mining companies operating in mineral reservations also pay an additional royalty equivalent to 5 percent of the actual market value of the minerals produced as the government collects 60 percent of the company’s gross revenues, regardless of whether it posts a profit or not.
The chamber computed the weight of these cumulated taxes at around 60 percent of the company’s net income before taxes.
The mining group said the government was already getting its fair share in the profits from mining projects.
The group asked the government to collect from small-scale miners, instead of legitimate mining companies.
“The tax leakage is coming not from large-scale mining but from small-scale and non-metallic mining companies. Yet, not a single centavo in taxes is being collected from these small-scale miners,” the chamber said.
The government stands to collect at least an additional P2.4 billion in revenues every year from small-scale mining operations, without increasing the existing excise tax.
The chamber also opposed the proposed public bidding on mining rights, saying it might drive investors away.
“While the concept sounds good, the reality is that an overwhelming number of mining countries use the “first-come first-served” policy for industry members to obtain exploration rights. The reason for this is that in an unexplored area, there has been no determination of whether or not mineral deposits exist. Investors would then have no rational basis for their bid,” the group said.
TVI Resource Development Inc. of Canada urged President Benigno Aquino to finalize the policies by the end of this month.
“It will be helpful for the whole mining industry, as well as the communities that are benefiting from mining, for a definite policy to be put in place to end the uncertainty and get the industry going again. We know government is aware of the enormous non-monetary contributions that companies like TVIRD are making to the economy, over and above taxes to the Treasury,” said the mining company. –Othel V. Campos, Manila Standard Today
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