Mining stocks fall as Senate approves nearly 3,000% coal tax hike
MANILA, Philippines – Mining stocks took a dive after the Senate approved a nearly 3,000% increase in coal taxes as part of the Duterte administration's comprehensive tax reform package.
The mining and oil index was the worst performer of all Philippine Stock Exchange (PSE) indices on Tuesday, November 28, falling by 615.65 points or 5.07% to end at 11,526.59 as trading closed.
All of the PSE indices, save for financials, were down on Tuesday, which caused the main PSE index (PSEi) to fall by 69.81 points or 0.84% to close at 8,291.88.
Tuesday was the first full trading day after the Senate voted late on Monday, November 27, to increase excise tax on coal from the current P10 per metric ton to P100 in 2018, P200 in 2019, and P300 in 2020 and succeeding years. The rate of P10 per metric ton has been in place since 1977.
It is important to note, however, that this is not yet final, as both chambers of Congress have to thresh out differences between their versions of the proposed tax reform package. The provision for coal tax is not in the bill approved by the House of Representatives.
One notable decliner on Tuesday was the Philippines' largest coal producer, Semirara Mining and Power Corporation (SMPC), which saw its stock fall by -6.97%.
SMPC chairman Isidro Consunji said the Senate's proposal tilts the playing field.
"If the government needs to raise money [through] tax, then everyone will need to share the burden in infrastructure. Taxation should not be discriminatory. If they want to tax coal, they should also tax natural gas and oil because if you just tax coal then you are giving a potential advantage to other fuel sources," Consunji explained.
"I don't think that is fair. If everyone is taxed, it would not destroy the competitiveness, but if you single out a fuel source and not the other, it's obviously discriminatory," he added.
Consunji also echoed some senators' worries that the coal tax hike would lead to even higher electricity rates.
"I think that obviously power prices will go up but since it will go back to investment then people will accept it if it redounds [in the form] of extra infrastructure," he said. – Rappler.com