House Bill 5143 - Excise Tax on Mining up from two to Seven percent

The Chairman of the House Committee on Natural Resources is seeking an increase in the excise tax on minerals and quarry resources in the country, from two percent to seven percent as just share of the government from mining activities.

Rep. Francisco Matugas (1st District, Surigao del Norte), author of House Bill 5143, said his proposal will also enable local government units (LGUs) hosting mining activities to benefit from the higher tax collection.

"Majority of the amount collected must be retained by the LGUs, after all, they are the ones which bear the great impacts of mining activities," Matugas said.

Matugas said the Philippines is one of the countries richly endowed with metallic resources. In terms of occurrence per unit area, it ranks third in gold, fourth in copper, fifth in nickel and sixth in chromite.

"As absolute and complete owner of these mineral and natural resources, it is expected that the country can generate substantial income from the utilization of these resources," Matugas said.

However, Matugas said although the gross production value in mining has been high --- P102.2 billion in 2007, P86.9 billion in 2008, P106.1 billion in 2009 and about P144.4 billion in 2010, the excise tax collected by the government from mining companies amounted to only P942.1 million in 2007, P660.3 million in 2008 and P718.8 million in 2009. For the first quarter of 2011, excise tax from mining amounted to P833.533 million from an estimated gross production value of P29.2 billion.

"These amounts can be considered insignificant considering that under Section 80 of Republic Act 7942, otherwise known as the Philippine Mining Act of 1995, the government's share in a mineral production agreement is already the excise tax paid on said mineral products. It must also be noted that mining is an extractive activity and greatly impacts the environment," Matugas said.

"The government, as the owner of the mineral lands, must therefore get its just share of revenues from mining activities. There must be an increase in the excise tax on minerals and quarry resources, from two percent to seven percent," Matugas added.

The bill seeks to amend Section 151(A), Chapter VII, Title VI and Section 287, Chapter II of the National Internal Revenue Code of 1977 (NIRC).

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