Chamber of Mines: Onerous Mining Tax Bill Contrary to Gov’t Pronouncements of Support for Industry

By: Philippine Resources August 29, 2022

Photo credit: The Chamber of Mines of the Philippines

The Chamber of Mines of the Philippines (CoMP) expressed concern over a proposed tax measure that may push back recent gains of the mining sector and deter prospective investments to the sector.

The bill passed by the House committee on ways and means proposes the imposition of a royalty tax of 5 percent on gross output of large-scale mining operations, while increasing the share of the government to 60 percent of net revenues.

The proposed legislation will also place a 10-percent export tax on mineral ore exports, to encourage domestic processing of mineral products.

CoMP said that while the proposed measure runs contrary to pronouncements of the new administration, there were no consultations with the industry stakeholders to refute the onerous provisions of the bill.

“We also maintain that figures shown during the Committee hearing that purported to show the industry’s effective tax rate at 38 percent was woefully out of date as such report was done in the year 2000, prior to the doubling of the excise tax on mineral products under TRAIN 1,” CoMP said in a statement.

Once passed into law, the bill will render the Philippine mining industry as one of the highest taxed mining countries in the world. 

It will also jeopardize the sector’s contribution to economic development in host communities that may result in a substantial reduction of exports and tax revenues and a considerable amount of social expenses.

In addition, a number of large-scale operations run the risk of closure, resulting in massive unemployment in their areas of operations. 

CoMP noted that bill will once again put into question the stability of mining policies, which is most detrimental to attracting foreign investments in such a capital-intensive industry. 

“Foreign investors will simply look elsewhere, we are not the only country blessed with mineral resources. If further tax increases are unavoidable, the tax structure should not be onerous as to stop investments from coming in,” the group said.

This will sustain existing mines and encourage quality investments in the hugely untapped Philippine minerals sector, ultimately expanding considerably the tax base and providing far larger tax revenues to government. 

“We thus call on Congress to revisit the bill recently approved by the Committee on Ways and Means and allow for full and meaningful consultations with stakeholders,”CoMP said.

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