Mining group hits 5% royalty hike, ‘unfair competition’

The Chamber of Mines, led by its president, has urged the Aquino administration to impose on small-scale miners regulations that are as stringent as those large-scale miners are subjected to, as well as to junk the proposal to impose an additional five percent royalty charge. “[Small-scale mining] is one of the roadblocks that the industry has identified as affecting the flow of investments in the country. Almost all legitimate mining companies have, at least once, dealt with the problem of small-scale miners sprouting in there respective areas of operations," said Chamber of Mines President Benjamin Philip Romualdez during the Mining Club meeting held twice a month at the Shangri-La Hotel in Makati City. Romualdez claimed that small-scale miners oftentimes violate mining policies, “put a stigma on the entire Philippine mining sector", and “give the industry a bad name." He lamented that despite the strict regulations under the revised mining law, small-scale miners have learned to circumvent government policies that affect large-scale investments in the sector. The Chamber of Mines alleged that government has failed to collect the necessary taxes from small-scale mining operations because small-scale mining players were effectively not being monitored nor regulated. Thus, they alleged unfair competition from small-scale miners. On their part, the Philippine Mine Safety and Environment Association (PMSEA) has also called for a review of the Small-Scale Mining Act (Republic Act No. 7076) to professionalize the industry and provide better opportunities to small scale miners. Small-scale miners only need to apply for a permit from local government units without having to pass through the Mines Bureau that would have otherwise provided them the professional and technical information and guidance vital to mine operations. Additional 5% imposition Romualdez was also wary over the Aquino administration’s expressed intention to raise the taxes and royalties collected from mining operations to a total of seven percent, warning that this would make the local mining industry lose its competitiveness in the long run. “It seems that there’s no stopping the Environment department from implementing the tax hike. But we have submitted our position and we have informed the President of our case. We have suggested the government look for other options," Romualdez said. "We need a formula that should be beneficial to all. Perhaps a net operating revenue-based formula would be more agreeable," the mining sector leader added. The Department of Environment and Natural Resources has proposed to raise government revenues from mining operations by declaring existing mining operations and those in advance stage of development and planning as mineral reservations in order to collect an additional five percent royalty on top of the two percent excise tax. Although already among the top 20 countries with the biggest potential for mining, the Philippines ranks 66th out of 79 countries in terms of government policy and this has affected the flow of foreign investments. The government proposal is meant to prevent tax leaks, which allegedly had amounted to P2.48 billion in excise taxes in the years 2008 and 2009. But the Chamber noted that most of this leakage can be traced to small-scale miners and not large scale producers. —MRT/ELR, GMA News