ATM Statement on the mining revenue bills
18 August 2015 – Batasan Pambansa, Quezon City, Philippines
Taking back what’s ours: Philippines mineral resources for the benefit of the Filipino nation
Good morning to the esteemed and distinguished members of the Ways and Means Committee of this Congress.
Alyansa Tigil Mina (ATM) is a coalition of mining-affected communities and their support groups, including non-governmental organizations, faith-based groups, academic institutions, and other groups collectively challenging the promotion of destructive large-scale mining in the Philippines. The alliance aims to change the policy framework on extracting minerals in the Philippines, from simply “extracting and profiting from mining minerals” to “mineral management towards national industrialization”. ATM believes this shift will drive local sustainable development, promote resilient communities and facilitate national industrialization.
ATM is not against mining per se. Our position is that should mining be considered as a viable industry, it must generally benefit the Filipino people and the mining-affected communities, rather than serve the needs of foreign countries and profits of large corporations. At present, our country is not able to maximize the full potential of its mineral resources mainly because of policies that were put in place since the Philippine Mining Act of 1995 was enacted. For the past decade, mining input to our GDP was only between 0.7% – 1%. Unfortunately, the resources are ours, but we get zero to nil (as SC Justice Carpio put it).
Our current fiscal policies on mining allowing for unnecessary incentives, including:
a) tax holidays to up to 5years (extendable and this includes excise taxes),
b) deduction of 50% of labor expenditure from taxable income,
c) tax and duty exemptions on imported capital equipment and spare parts,
d) exemption from wharfage fees, and additional incentives for enterprises located in less developed areas,
e) privilege to deduct 100% of expenditure on infrastructure from taxable income over a period of 10-years,
f) no income taxes while on exploration period,
g) exemption of pollution control devices from real property and other taxes,
h) income-tax carry forward of net-operating losses incurred in the first 10-years, which may be deducted from taxable income over a five-year period,
i) accelerated depreciation of assets, at twice the normal rate,
j) option to deduct the cost of all exploration and development expenditures from taxable income over a four-year period from commencement of commercial operations—
And all these incentives while we only charge 2% excise tax. There are more incentives for FTAA holders. [FTAA No. 1 under OceanaGold in Didipio, Nueva Vizcaya currently is on tax holiday for six years, extendable for another two years.]
One of ATM’s campaign call is to repeal the current mining law (RA 7942) and enact a new Minerals Management Bill currently filed as Philippine Mineral Resources Act or HB 984. The bill champion’s conservation of non-renewable mineral resources for the benefit of both present and future generations of Filipinos by adopting a sustainable, rational, needs-based minerals management geared towards effective utilization of mineral resources for an ecologically-sound national industrialization and modernization of agriculture. While there has been delay in the proceedings of the earlier mining bills filed, we believe that engaging this new set of bills focused on increasing our revenue from mining is worthwhile. At the outset, we support HB 5843, and vehemently oppose HB 5367 for substantial reasons.
Questionable Sections of HB 5367
While HB5367 claims to be focused on large-scale mining’s fiscal regime and revenue sharing scheme, our review reveals that this bill will impact greatly local autonomy and rights of indigenous peoples. We see policy conflict with the Local Government Code (RA 7160) and the Indigenous Peoples’ Rights Act (RA 8371). Specifically, we are concerned with provisions on Sections 5 and 6—the establishment and administration of Mining Industry Zones; Section 7—fiscal regime and revenue sharing agreement; and Section 21—vested rights.
Section 5 of HB 5367 provides that “all mining areas governed by the Act shall be declared by the President as Mining Industry Zones”. This means that after a consultation with LGUs and indigenous cultural communities (for mining areas within an ancestral domain), the LGU shall endorse the establishment of the MIZ—that includes a waiver of its power to regulate the mining business operations. This will effectively divest LGUs of its regulatory functions to issue business permits and other license requirements, and strips off its powers to regulate mining activities.
Section 6 of HB 5367 further provides “Any local issuances and/or directions that may be issued by the host LGU, which may affect or relate to mining operations and other incidental activities thereto, shall be consistent with and shall conform to the provisions of this Act and to the laws, regulations, policies and decisions taken by the national government.” When an area is declared a Mineral Industry Zone,it is in effect no longer under the jurisdiction of LGUs, even if the general welfare of its people is threatened. These threats and risks may include mining impacts to the environment, impacts to sources of livelihoods, and health of communities within the mining area. Under the framework of a Mineral Industry Zone, the LGU are now constrained to perform their mandates for the General Welfare of its constituents, under Sec. 16 of the LGC.
Unfortunately, the establishment of MIZs will be worse for indigenous peoples whose lands will be literally taken from them. It is unclear, how compliance with IPRA’s free prior and informed consent (FPIC) process will be implemented in MIZs.
The proposed bill increases the State’s income from the mining industry. However, Section 7 states that the 10% gross revenue tax ALREADY includes the IP royalty and LGU taxes. This takes away the bargaining power of IP communities in terms of negotiating their royalty payments, and the power of LGUs to increase its revenue sources.
Sec 9 of HB 5367 proposes a different set of incentives, but we are more in support of the calls by some economists and organizations that propose the cancellation of all incentives for mining companies. Our position is reflected in Sec. 103 ofHB 984/AMMB: “Incentives that shall be given to the contractors shall be limited to pollution control or mitigation devices.”
Lastly, Section 21 of HB 5367titled “Vested Rights”, provide that if enacted into law, current mining agreements and FTAAs that do not have a provision allowing for the repeal or amendments of existing laws, etc, shall not be affected by subsequent laws. This means old contracts are immune from this new scheme. Our position is that the intent of enacting a new mining revenue law is to provide flexibility for the Philippine government to re-negotiate all existing mining contracts to ensure a just share from our own mineral wealth.
Now we ask, will this new bill proposed by the Mining Industry Coordinating Council actually allow us to benefit more from mining or will it only give more incentives and profits to mining contractors and investors? ATM believes that, HB5367 in its current form oversteps the “economics” of mining, and whether intentionally or not, weakens the authority of local governments and disempowers further mining-affected communities.
Support to HB 5843
More than two decades of selling out and giving away our mineral wealth should stop. We push for the immediate passage of a new fiscal regime for mining operations, increasing the taxes for mining projects. A new measure should contribute to ensuring that the benefits of mining will be fair for the State as rightful owner of the resources. A just share is adequate to compensate the communities and local governments who are bearing the brunt of the environmental, social and health costs of mining operations.
Meanwhile, if only to look at a piecemeal legislation, ATM believes that HB 5843 is in congruence with economic provisions proposed in the Alternative Minerals Management Bill. We support the increase in tax and revenue share from mining, and incentives rationalization. We further support the provisions earmarking proceeds from mining to health, education and environmental programs and provisions on transparency and accountability. Your honor, we have reviewed HB 5843 and we trust that if enacted, in its current form, will allow us to benefit from our mineral wealth.
AlyansaTigil Mina is an alliance of mining-affected communities and their support groups of POs and other civil society organizations who oppose the aggressive promotion of large-scale mining in the Philippines. The alliance is currently pushing for a moratorium on mining, revocation of EO 270-A, repeal of the Mining Act of 1995, and passage of the AMMB.
For more information:
JaybeeGarganera, ATM National Coordinator (0917) 549.82.18 <email@example.com>
Check Zabala, ATM Media and Communications Officer (0927) 623.50.66 <firstname.lastname@example.org>