Philippines eyes $1bn revenues from proposed new mining law
The Philippine government expects to double its annual returns from mining to as much as US$1 billion under a revenue-sharing scheme approved Monday that will see the government taking 55% of the industry's net revenues or 10% of gross revenue, whichever is higher.
According to Manila Standard Today, the government panel —the Mining Industry Coordinating Council (MICC)— will present the proposal to President Benigno Aquino this week for approval before submitting it to Congress.
Mining taxes in the archipelago is a problematic issue that has delayed development of the country's vast mineral resources, worth around US$850 billion according to the Mines and Geosciences Bureau (MGB) estimates.
The proposed ruling has the country's biggest industry group up in arms, as miners believe that increasing the tax would kill the industry.
But MGB chief Leo Jasareno disagrees. He told ABS-CBN News that the proposed bill will make the Philippine mining industry “more competitive and more relevant to the country’s economy.”
The tax hike will raise mining companies payments to the government by at least 50%. Currently, miners operating under the mineral production sharing agreement specified in the Philippine Mining Act of 1995 only pay 2% of their gross revenues to government.
In July 2012 Philippine president Benigno Aquino signed an executive order halting the issuing of mining licenses while the country updates the sector's outdated legal framework.
The order established a Mining Industry Coordinating Council to oversee the sector and banned mining from some 78 areas considered sensitive ecosystems, crucial to farming or tourism or unsuitable for other reasons.
After the decree and in anticipation of the new law, foreign investment in the country’s resources sector plummeted.
Never that high to begin with, investment in the island nation now attracts less than $500 million worth of mining investment, down from nearly $1 billion in 2010 according to government data.
The archipelago is rich in copper, gold, silver and chromium and at the moment produces more than 10% of the world's nickel, but minerals make up only 8% of its exports.
The situation is not likely to improve any time soon — The Fraser Institute’s latest annual global survey of mining executives ranked the Philippines as one of the worse places for investors, behind only Kyrgyzstan and Venezuela.
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