House panel approves bill overhauling imposition of royalties in mining industry

Published January 23, 2020, 12:00 AM

by manilabulletin_admin

By Charissa Luci-Atienza 

The House Committee on Appropriations swiftly passed on January 22 a bill seeking to overhaul the imposition of royalties in the mining industry.

The Joint Session of the Senate and the House of Representatives on the extension of Martial Law in Mindanao commences in the Plenary of the Batasang Pambansa on December 13, 2017. (ALVIN KASIBAN / MANILA BULLETIN)

The measure – an unnumbered substitute bill – was approved in less than two minutes by the House panel, chaired by Davao City Rep. Isidro Ungab. It seeks to rationalize and institute a single fiscal regime for the mining industry, and enhance the equitable share of the government in the utilization of natural resources without compromising the mining sector‘s need for reasonable return on its investment.

“This measure was virtually approved by Congress in the 17th Congress. May I seek the approval of this bill,” Albay Rep. Joey Salceda, chairman of the House Committee on Ways and Means, told colleagues during the initial deliberation of the bill.

In November last year, the Salceda panel approved the bill, which could provide P25 billion additional revenues to the government in five years.

Ungab noted that the bill was a “re-filed” measure and was approved by the House of Representatives on third and final reading during the 17th Congress.

The substitute bill mandates that the mining contractors of large-scale metallic mining operations within mineral reservations to pay to the government a royalty equivalent to three-percent of the gross output of the minerals or mineral products extracted or produced by the mining operations, exclusive of all other taxes.

Under the bill, a margin-based royalty tax, ranging from 1 percent to 5 percent, shall be imposed on mining contractors of large-scale mining operations outside of mining reservation areas.

The measure also imposes royalty tax on small-scale mining operations equivalent to 1/10 of 1 percent of the gross output and a margin-based royalty tax on large scale mining operations outside the mining reservations.

Aside from the aforementioned royalties, the bill also seeks the imposition of a windfall profit tax of 1 to 10 percent on income from mining operations.

Under the current law, miners are only required to pay royalty fees if they mine in sites declared as mineral reservations.

The bill also seeks the creation of the Natural Resource Trust Fund. The revenues collected from the margin-based royalty paid by the large-scale metallic mining operations outside the mineral reservations shall accrue to the proposed Trust Fund, it said.

The Trust Fund shall be remitted to the Bureau of Treasury within the first quarter of the succeeding income year, according to the measure.

“The fund shall redound to the benefit of provinces, cities, municipalities, and barangays directly affected by the mining operations which shall commence three years after the effectivity of the Act and every six years thereafter,” it said.

The bill authorizes the concerned local government unit “to use the fund to support educational programs, technological research programs of local relevance, disaster risk management, rehabilitation of abandoned mines prior to Republic Act No. 7942, and health services programs of the communities directly affected by mining activities.”

The measure tasks the Department of Finance (DOF), after consultation with other concerned government agencies, to promulgate the implementing rules and regulations of the proposed Act within 90 days from its effectivity.