DAVAO CITY (MindaNews / 3 Sept)—A measure to reduce from five to three percent the royalty fee imposed on mining operations within mineral reservations, many of which are in Mindanao, has been approved by the Committee on Ways and Means of the House of Representatives.
Rep. Joey Salceda (Albay, 2nd District), the Committee chair, submitted for plenary deliberation House Bill No. 8937 (An Act Enhancing the Fiscal Regime for the Mining Industry), which proposed a three-percent royalty on gross output for large-scale metallic mining operations within mineral reservations.
Under Section 13 of the Implementing Rules and Regulations (IRR) of Republic Act 7942 or the Philippine Mining Act of 1995, it imposed a royalty of not less than five percent of the market value of the gross output for mining companies operating in mineral reservations, exclusive of all other taxes.
The five percent royalty was originally contained in the 2022 Committee Report of the Ways and Means Committee.
Beverly Besmanos, national coordinator of Bantay Kita, a coalition of civil society organizations advocating for transparency and accountability in the extractive industry, said that lowering the royalty from five to three percent would have adverse impacts to the royalty share of local government units.
“We’re opposed to the proposed reduction of the royalty rate,” she told MindaNews by phone on Sunday. “Bibilis ang mina pero bababa ang kita ng mga host localities.”
Besmanos said that while the government aims to generate more revenue from mining, the committee level-approved HB 8937 fails to secure increased financial gains from the mining industry.
“This is due to the decreased government royalty share from 5% to 3% of mining operations within mineral reservation areas, [and] the profit-based royalty for mining operations outside mineral reservations that protects the financial risks of mining companies rather than the impacted communities,” she said.
A tax advocacy expert, who requested anonymity as he doesn’t want to drag the groups he is affiliated with, separately explained the negative implication of a reduced royalty rate to local government units that host mineral reservation areas.
In the case of Claver, Surigao del Norte, lowering the royalty from five to three percent means reducing the royalty share of the municipality from P137.7 million to 82.6 million, a reduction of P55 million or 40 percent, he explained to MindaNews via a presentation.
P55 million, he added, is equivalent to 76% of the municipality’s P72.63 million spending for social services and social welfare in 2022.
As of 2022, almost half of Claver, a second class municipality with a population of 36,033 as of 2020, is covered by mining tenements—15,226 hectares within mineral reservation and 688 hectares outside mineral reservation.
Mindanao hosts at least eight operating metallic mines within mineral reservation areas.
These are in Loreto, Libjo, Basilisa and San Jose, and Tubajon in Dinagat Islands; Claver and Tagana-an in Surigao del Norte; Carrascal in Surigao del Sur; and Rosario in Agusan del Sur.
“Bababa ang pera na mapupunta sa mga komunidad na apektado ng mining (It will cut the royalty share of the host communities),” the tax advocate said on the implication of a reduced royalty rate.
Margin-based royalty
HB 8937 also seeks a margin-based royalty from 1 to 5 percent for large-scale metallic mining operations outside mineral reservations. For instance, a one percent royalty will be collected from a mining firm if the profit margin is between 1 to 10 percent, 1.50 percent from above 10 percent up to 20 percent, and so on.
On the other hand, small-scale metallic mining operations will be levied a royalty rate of one-tenth of one percent of gross output.
Under the IRR for RA 7942, mining firms need to pay another royalty of not less than 1 percent of their gross output to indigenous cultural communities if the operation is within an ancestral domain.
HB 8937 also introduces a profit-based windfall tax design. Under this scheme, metallic mining companies will be levied 1 percent if the profit margin is 35 to 40 percent, 2 percent if profit margin is more than 40 percent up to 45 percent, with the tax increasing up to 10% as the margin increases.
HB 8937, a substitute bill for HBs 373, 2014, 2246, 3888 and 8050, was included in the Calendar of Business of the House of Representatives on August 30, 2023.
The measure was filed and received by the Lower House’s Bills and Index Service last August 22.
Salceda and Rep. Mikaela Angela Suansing (Nueva Ecija, 1st District) sponsored HB 8937.
The co-authors of the bill are Representatives Luis Villafuerte Jr. (Camarines Sur, 2nd Dist.), Miguel Luis Villafuerte (Camarines Sur, 5th Dist.), Tsuyoshi Anthony Horibata (Camarines Sur, 1st Dist.), Nicolas Enciso VIII (of Bicol Saro Party List but was later replaced), Stella Luz Quimbo (Marikina City, 2nd Dist.), Lex Anthony Cris Colada (AAMBIS-OWA Party List), Allan Ty (LPGMA Party List), Nelson Dayanghirang (Davao Oriental, 1st Dist.), Ernesto Dionisio Jr. (Manila, 1st Dist.), Kristine Singson-Meehan (Ilocos Sur, 2nd Dist.), Ralph Recto (Batangas, 6th Dist.), Jose Alvarez (Palawan, 2nd Dist.), Adrian Michael Amatong (Zamboanga del Norte, 3rd Dist.), John Tracy Cagas (Davao del Sur), Sergio Dagooc (APEC Party List), Alfred delos Santos (ANG PROBINSIYANO Party List), Arnie Fuentebella (Camarines Sur, 4th Dist.), and Ramon Ordanes (SENIOR CITIZENS Party List).
The others are Representatives Ray Florence Reyes (ANAKALUSUGAN Party List), Florida Robes (San Jose del Monte City), Ron Salo (Kabayan Party List), Lordan Suan (Cagayan de Oro City, 1st Dist.), Gustavo Tambunting (Parañaque City, 2nd Dist.), Jose Teves Jr. (TGP Party List), Rosanna Vergara (Nueva Ecija, 3rd Dist.), Maria Carmen Zamora (Davao de Oro, 1st Dist.), Horacio Suansing Jr. (Sultan Kudarat, 2nd Dist.), Josephine Veronique Lacson-Noel (Malabon City), Alfelito Bascug (Agusan del Sur, 1st Dist.), Presley de Jesus (PHILRECA Party List), Janice Salimbangon (Cebu, 4th Dist.), Roy Loyola (Cavite, 5th Dist.), Rufus Rodriguez (Cagayan de Oro City, 2nd Dist.), Luisa Lloren Cuaresma (Nueva Viscaya), Wilter Palma (Zamboanga Sibugay, 1st Dist.), Michael Gorriceta (Iloilo, 2nd Dist.), Joseph Gilbert Violago (Nueva Ecija, 2nd Dist.), Mario Vittorio Mariño (Batangas, 5th Dist.), Milagros Aquino-Magsaysay (United Senior Citizens Party List), and Ambrosio Cruz Jr. (Bulacan, 5th Dist.) (Bong S. Sarmiento / MindaNews)
