Gov’t intent on increasing share of mining revenues
More out of the mining! I think this is a fair call to make. Professor Monsod's contribution to the debate is positively level-headed and recalls the case made for "sustainable capitalism" in global circles. The government is certainly quite entitled to raise maximal revenues from the county's mining sector, but with this entitlement comes a host of responsibilities which it must address with equal fervor.
Quotes from Prof. Monsod:
"The real question before us today is: Should mining be allowed in the Philippines?
"I believe that we should be open to that proposition provided four minimum conditions are met: (1) the environmental, social and economic costs are accounted for in evaluating mining projects; (2) the country gets a full and fair share of the value of the extracted resources, (3) and this is addressed to the government, the institutional capabilities of the government to evaluate and regulate mining activities are put in place; and (4) again addressed to the government, since mining uses up non-renewable natural capital, the money from mining are specifically used to create new capital such as more developed human resources and infrastructure, particularly in the rural areas. ...
"Some comparisons by the MGB of the fiscal regimes of selected countries (China, India, Indonesia, Mongolia, Myanmar, Papua New Guinea, Peru, Chile) show that the fiscal regime in the Philippines is quite competitive with, if not more favorable than, those of other countries.
"Moreover LSM are given generous tax incentives, to wit:
(1) income tax holidays of 5 years (including excise taxes);
(2) deduction of 50 percent of labor expenditure from taxable income,
(3) tax and duty exemptions on imported capital equipment and spare parts,
(4) exemptions from wharfage fees, and additional incentives for enterprises that locate in less developed areas.
(5) the privilege to deduct 100 percent of expenditures on infrastructure from taxable income, over a period of 10 years
(6) during the exploration period are not liable for income taxes. When they begin commercial operations, they are entitled to register with the Board of Investments for a five–year income tax holiday
(7) exemption of pollution control devices from real property and other taxes41;
(8) 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;
(9) accelerated depreciation of assets—at twice the normal rate
(10) option to deduct the cost of all exploration and development expenditures from taxable income over a four-year period from commencement of commercial operations;
In the case of FTAA (financial and technical assistance agreements)
(11) they are allowed to recover all their tax and operating expenses before they begin to pay either the basic or the additional shares of government, such as:
(12) “(a) contractor’s income tax; (b) customs duties and fees on imported capital equipment; (c) value-added tax on imported goods and services; (d) withholding tax from interest payments on foreign loans; (e) withholding tax on dividends to foreign stockholders; (f) documentary stamp taxes; (g) capital gains tax; (h) excise tax on minerals; (i) royalties for mineral reservations and to indigenous peoples , if applicable; (j) local business tax; (k) real property tax; (l) community tax; (m) occupation fees; (n) registration and permit fees; and (o) all other national and local taxes, royalties and fees as of effective date of the FTAA.”
"To summarize the issue on the revenue sharing: Not only are our minerals not given any value, our government pays the contractors to extract them through fiscal incentives. What do we get in return?
(a) Very little by way of taxes, fees and royalties, and practically none at all during the tax holiday period;
(b) Very little by way of job generation;
(c) Probably little net foreign exchange inflows;
(d) Very little contribution to GDP;
(e) Very little industrialization linkages;
(f) Questionable poverty alleviation results
(a) Very little by way of taxes, fees and royalties, and practically none at all during the tax holiday period;
(b) Very little by way of job generation;
(c) Probably little net foreign exchange inflows;
(d) Very little contribution to GDP;
(e) Very little industrialization linkages;
(f) Questionable poverty alleviation results
"Of course, there is always the potential. But there may be another side to the relatively low benefits from mining – there is not much to lose should the government refuse to give in to the demands of mining that would compromise the environment. Timely alternative development strategies may, in fact, result in a net gain."
