House panel cautioned on 5-percent royalty tax vs mining industry

By Charissa Luci-Atienza – Manila Bulletin

Lawmakers cautioned on Tuesday the House Committee on Ways and Means against passing a bill that would impose five-percent royalty tax against mining companies carrying out metallic and non-metallic mining operations within and outside mineral reservations, saying that it would “kill” the mining industry.

Surigao del Sur Rep. Johnny Pimentel laments that the mining industry, considered as “sunshine industry” is already heavily taxed.

“If we approve this bill, if we did not come to a compromise, it might kill the industry,” he said, as the House Committee on Ways and Means, chaired by Nueva Ecija Rep. Estrellita Suansing tackled the unnumbered substitute bill to House Bills 422 and 7994, which seek to establish the fiscal regime for mining industry.

“We are sending wrong signal to the investors,” he said.

Suansing’s panel is seeking to approve the substitute bill, which mandates the mining contractors for all metallic and non-metallic mining operations, whether large-scale or small-scale to pay the government a royalty equivalent to: if within mineral reservations, five percent of the market value of the gross output of the mineral products extracted or produced by the mining operations exclusive of all other taxes; and if outside mineral reservations, three percent on the first three years upon the effectivity of the Act, four percent on the fourth year and five percent on the fifth year.

“Let’s us not kill the goose that lay the golden egg,” Pimentel said, lamenting that Surigao del Sur will be most affected once the measure is enacted into law.

“Before Surigao del Sur was one of the poorest provinces. Mining industry is a miracle industry that saves Surigao del Sur from the bondage of poverty,” the lawmaker said.

Pimentel appealed to the Department of Finance (DOF) “to come to a compromise and be considerate of the repercussions.”

“Let’s come to an agreement, let’s give consideration to the mining industry,” he said.

Deputy Speaker and Cebu Rep. Gwendolyn Garcia cited the need to revisit the imposition of five-percent royalty tax against mining companies.

“I join Rep. Pimentel to revisit the five-percent royalty tax, taking into consideration the present realities of mining companies. A graduated royalty is more reasonable because not all mining industries are similarly situated,” she said.

During the hearing, Camarines Sur Rep. Luis Raymund Villafuerte proposed the imposition of margin-based or profit-based royalty.

“We can apply on all the same rate if they have same conditions. We should all study na hindi pantay pantay ang mina. I strongly urge a margin-based royalty. The mining industry is two-steps forward, and five-steps backward,” he said.

During the committee hearing, Finance Assistant Secretary Teresa Habitan replied in the affirmative when she was asked by Suansing if the DOF and the mining sectors “have already finished the meeting and there are compromises.”

The DOF official said the mining industry requested for margin-based royalty.

Suansing said they cannot give in to the whims of the mining industry and even clarified that they are not railroading the passage of the bill.

The panel suspended the hearing without passing the substitute bill to House Bills 422 and 7994, authored by Marikina Rep. Miro Quimbo and Suansing.

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