Philippine legislation on mining revenue sharing

A new legislation on mining revenue sharing is not likely to be passed this year as Congress effectively stops session ahead of the May 2013 election, the speaker of the House said on Tuesday.

In an interview on the sidelines of the Mining Conference 2012, House Speaker Feliciano Belmonte said that lawmakers will not be able to act on the proposed amendments of the Mining Law, noting that they have yet to receive a draft bill from the interagency group.

“This session is fast going on a close. The taxation issue should be a priority bill, but I don’t believe we have the draft in our hands right now,” Belmonte said.

He said that he will follow up on the proposed bill with the Mining Industry Coordinating Council, the interagency committee tasked to come up with the concrete programs and legislation on mining reforms based on the provisions of Executive Order No.79.

“There is [still] time for the mining industry to submit their own paper and get their act together,” the speaker added.

Belmonte also said that the House of Representatives is focused on budget hearings and other “priority” legislations, particularly the sin tax law.

During his opening speech, Belmonte said the 15th Congress will consider the legislation of a progressive form of taxation for mining as a new revenue sharing scheme that will benefit all stakeholders, especially local governments that host mining projects.

“The suggestion for the adoption of a progressive form of taxation is worth considering. This system is based on profits and will allow government a higher share in mining revenues when profits achieved by mining firms are high,” he said.

Belmonte also stressed that all stakeholders in the sector should weigh the costs of mining against its benefits.

Aside from protection from possible health and environmental risks, stakeholders should also ensure that benefits from mining will go to local government units – adding that LGUs should receive their just share from the collections derived by the national government from mining taxes.

“Mining is essentially a local activity. While the benefits of mining may accrue to everyone, its negative effects such as health and environmental risks are borne mainly by the inhabitants in the mining site and its immediate environs,” he said.

Thus, while LGUs would logically want to be given just shares in the proceeds from mining activities in their localities, they also want to be assured that the welfare of their communities will not be sacrificed at the expense of development, Belmonte added.

Part of the proposed revenue sharing scheme is rationalizing fiscal incentives extended to mining companies and also applying rules equally to both small- and large-scale mining firms.

With the reforms in place, Belmonte expressed confidence that the Philippines can replicate the success of China and India, noting that right strategies should be pursued.

Both countries have large mining sectors that serve their domestic markets, employ millions of workers, and drove economic growth.

The GDP per capita in India and China grew at impressive annual rates of 3.7 percent and 8.5 percent, respectively during the 1990s, well above most other mining countries.

“The rapid growth of mineral production in China can possibly be attributed to a combination of long-term central planning and the dynamic forces created by themarket economic approach of each mining enterprise,” Belmonte said.

“Meanwhile, India is an example of a country with a large and well-developed state sector in the mining industry,” he added.

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