MVP to gov’t: Be kinder to mining

MANILA, Philippines – Help mining firms cope with the tough business climate by going easy on taxes. This is the proposal of businessman Manuel V. Pangilinan, who controls one of the largest gold mines in the country.

At the closing ceremonies of the 61^st Annual National Mine Safety and Environment Conference held in Baguio City on Friday, November 14, Pangilinan said the tax increase proposed by the Mining Industry Coordinating Council (MICC) discourages miners from maximizing benefits from resources.

Mining, he pointed out, is risky business, considering that they have no say in the price of the minerals they sell and they have little say too on the yield extracted from their ore. “Taxing revenues alters the risk/reward balance in mining,” Pangilinan said.

The MICC is proposing either a 10% tax on gross revenue or a 55% tax on adjusted mining revenues plus a percentage of windfall profit, whichever would yield higher revenues for government.

Adjusted mining revenues refer to the difference between gross sales and direct cost (direct mining cost and administrative expenses).

The new revenue sharing scheme will be applicable to metallic mining projects with a mineral production sharing agreement (MPSA) and Financial Technical Assistance Agreement (FTAA). The proposed revenue sharing bill is still being reviewed by the Office of the President.

What’s sensible, fair

Pangilinan prefers taxing pre-tax income over revenues.

“I submit that taxing our pre-tax income is the more sensible and fair arrangement,” he said. Describing what we referred to as “more difficult times ahead,” Pangilinan pointed to “declining metal prices; lower demand due to faltering economies in China and India, Europe and Latin America; continuing anti-mining sentiment.” For mining to stay in shape or keep afloat, it must be “resilient,” he added.

The regulatory functions of the Department of Environment and Natural Resources (DENR) on the one hand and the management and industry promotion functions of the Mines and Geosciences Bureau (MGB) must also be made separate.

The lack of delineation between the two functions, according to Pangilinan, “puts us in some regulatory uncertainty and finds no advocate for us within government.”

MGB director Leo Jasareno said the regulatory functions of the DENR and the MGB are structured in such a way to harmonize industry regulations with industry interests.

But to Pangilinan, the inclusion of the mines bureau in the DENR is something that “restricts the growth of the industry. That’s why there have been calls for the separation of the MGB from the DENR so it can function as a promotion body for the industry.” 

The MGB, according to Jasareno, acts as manager of the country’s resources and not only enforcer of environmental laws. – Rappler.com

Iron ore mining pit image from Shutterstock