The House Committee on Ways and Means has approved a consolidated measure establishing a fiscal regime for the mining sector, which is estimated to generate P37 billion in revenue in its first year, if enacted.
Ways and Means Chairman Albay 2nd district Rep. Joey Salceda led the hearing on Wednesday, Aug. 24. The Department of Finance (DOF), during the hearing, estimated that the proposed measure would generate P37.52 billion in revenue.
The approved bill–which uses the amendments put forward by the DOF–mandates that a royalty tax of five percent would be imposed on the market value of gross output of large-scale metallic mining operations. Furthermore, a 60 percent minimum government share would be imposed on mining operations.
A 10 percent export tax would also be sought on the market value of mineral ore exports.
It was also clarified that zero percent of the estimated revenue would be generated from small-scale mining operations.
According to Salceda, the approved version would “bring the country’s effective tax rate on mining (considering all taxes) to 51 percent, up from 38 percent under the current system".
“That brings us closer to the middle of the pack among major mining countries, instead of near the bottom of the list. 51 percent is a good number, because it brings us closer to Australia’s effective tax rate, at around 51 percent as well, counting royalties...Among major countries, only Chile and South Africa have lower effective tax rates than us. This proposal brings us closer to Australia and Indonesia, which are our regional comparatives. China is at a very high 71 percent effective tax rate for gold mines,” Salceda explained.
The economist-lawmaker added that this mining tax regime would be “fulfilling a commitment” made to President Ferdinand “Bongbong” Marcos Jr.
“With this measure, we are fulfilling our commitment to the President and to the DOF to raise revenues to fund PBBM’s priority programs...If enacted, it will be very good for President BBM’s bigger ambitions for infrastructure, agricultural revolution, and a solid Filipino middle class,” he said.
The House tax panel approved four House bills (HBs) for consolidation during the hearing: Salceda’s HB 373; HB 2014 authored by Camarines Sur 2nd district Rep. LRay Villafuerte, CamSur 5th district Rep. Miguel Villafuerte, Camsur 1st district Rep. Tsuyoshi Horibata, and Bicol Saro Party-list Rep. Nicolas Enciso; HB 2246 authored by Marikina City 2nd district Rep. Stella Quimbo; and HB 3888 by AAMBIS-OWWA Party-list Rep. Lex Colada.
The consolidated bill carrying the DOF amendments is currently unnumbered.