Home Forex Key legislator says mining industry fiscal overhaul crucial for recovery

Key legislator says mining industry fiscal overhaul crucial for recovery

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DAVID HELLMANN-UNSPLASH

A PROPOSED LAW overhauling the tax regime for the mining industry is considered critical for the economic recovery because of its potential to generate revenue for the government and make the investment climate more certain.

Albay Rep. Jose Ma. Clemente S. Salceda, chairman of the House Ways and Means Committee, said the bill is important because of current “deficiencies” in how the government manages its natural wealth.

“We still need a fiscal regime for mining, as a baseline or downside protection for whatever negotiations are entered into by the government (with investors),” he said in a speech at the Philippine Extractive Industry Transparency Initiative National Conference on Thursday.

Mr. Salceda said that he sees the mining industry as “a potential job creator post-pandemic” and crucial for the economic recovery because of the tax revenue it will likely generate.

“The proposed regime will generate P7.2 billion in incremental revenues in the first year and P37.9 billion over the next five years,” he added.

The Mines and Geosciences Bureau estimates the mining sector accounted for P102.3 billion in output, equivalent to 0.6% of gross domestic product, in 2020.

However, Mr. Salceda said that there is a “lack of a coherent fiscal regime” that would set aside funds for rehabilitation and investment.

House Bill 6135 seeks to “introduce corporate governance structures” such as the imposition of royalty payments, margin-based windfall profits tax, and (will discourage) businesses’ dependence on excessive debt funding.

The measure also seeks to create a national resource trust fund from royalty payments of large-scale metallic mining operations outside of mineral reservations to fund projects by local government units that are affected by these activities.

“If we don’t set aside anything from the mining revenue for those externalities, the costs will (manifest) in some form, sometimes in tragedy. There has to be a dependable reserve of financial resources for timely rehabilitation of mines and for mining communities,” Mr. Salceda said.

Chamber of Mines of the Philippines Executive Director Atty. Ronald S. Recidoro said Friday via Viber that the group supports the proposed law, calling it necessary to “create a more stable investment environment.”

“We expect this policy to impact laws such as the tax code that properly governs revenue sharing in all mineral agreements,” he told BusinessWorld. — Russell Louis C. Ku

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