By John Victor D. Ordoñez, Reporter
THE PHILIPPINE Senate on Tuesday evening approved on second reading a bill that seeks to set up a five-tier margin-based royalty and windfall profit system for the mining industry, which is expected to raise the government’s share in mining profits.
Under Senate Bill No. 2826, a priority measure of the Marcos government, the five tier margin-based royalty system will range from 1% to 5%, while the five-tier windfall profit tax system will range from 1% to 10%.
Under the law, mining companies pay corporate income tax, excise tax, royalty, local business tax, real property tax and fees to indigenous communities.
In a statement, the Chamber of Mines of the Philippines welcomed the Senate approval but urged senators to do away with a provision in the bill banning the export of raw ores.
“Its intended purpose of compelling mining companies to build processing plants within five years before the enforcement of the ban will not happen,” it said.
“A raw ore export ban will lead to more mine closures and, consequently, to unemployment for hundreds and thousands of Filipino workers who rely on mining, directly or indirectly, for their livelihood,” it added.
The group also cited the need for more power plants to address high power costs.
“Rationalizing taxes and royalties in the mining sector can unlock substantial revenues for the government,” John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said in a Viber message.
“This is especially important given the sector’s potential to support infrastructure development and rural job creation while ensuring environmental safeguards,” he added.
The House of Representatives approved its version of the bill in September.
Under House Bill No. 8937, large-scale miners inside mineral reservations must pay the government only 4% of their gross output, while the Senate version requires them to pay 5%.
The House version proposes an eight-tier margin-based royalty regime ranging from 1.5% to 5% and a 10-tier windfall profit tax system ranging from 1% to 10%.
In October, Australian Ambassador to the Philippines Hae Kyong Yu said that the Australian Embassy in Manila had brought in Australian mining tax experts to work with their Philippine counterparts as Congress worked on the mining tax bill.
The embassy has also been encouraging players in Canberra’s mining industry to partner with their Philippine counterparts on best practices.
Senator Joseph Victor “JV” G. Ejercito, who sponsored the bill, earlier said the new tax regime would boost government revenue from the industry.
In his sponsorship speech in September, he said the new fiscal measure would “foster an enabling policy environment” and make the industry more competitive with Manila’s regional peers.
The Department of Finance has said the government could generate P6.26 billion in additional annual revenue from the revised mining tax regime.
“We submit that a more sustainable approach would be to focus on improving infrastructure, reducing energy costs and enhancing regulatory stability to attract investments in mineral processing,” the local mining group said.