Sponsorship Speech of Sen. JV Ejercito on Enhanced Fiscal Regime for Large-Scale Metallic Mining Act
September 17, 2024
Mr. President, my dear colleagues, good afternoon.
It is my distinct honor to rise today to sponsor and
champion, Senate Bill 2826 under Committee Report No. 329 or the “Enhanced
Fiscal Regime for Large-Scale Metallic Mining Act”, one of the priority
measures identified in the Legislative-Executive Development Advisory Council
in the 19th Congress.
As the Philippine economy continues to recover from the
lingering effects of the economic downturn brought about by the recent global
pandemic, it is crucial that we leverage every available resource to strengthen
and revitalize our economic standing. This proposed measure helps to answer
that call.
The mining sector stands out as an industry we can leverage
to achieve this aim. With the latest data presented by the Department of
Finance, a total of Php 115.66 billion of taxes, fees, and royalties were
collected by the national and local government units for a period covering the
year 2020-2022 - this means that an average collection of Php 38.55 billion
every year.
Mr. President, our nation’s economic managers see vast
potential for growth in this sector, which remains underutilized and
underdeveloped. According to the Mines and Geosciences Bureau of the DENR, out
of the nine (9) million hectares identified as having high mineral potential
across the Philippine archipelago, only 2.52% is covered by mining tenements.
Moreover, NEDA Secretary Arsenio Balisacan, in a recently held forum on the
revitalization of the industry, underscored that mining had a modest contribution
of 0.5 percent of the nation’s gross domestic product (GDP) by the end of 2023,
which points to the fact that there is still room for significant growth. In
addition, it is undeniable that the mining sector contributes to the generation
of additional jobs for our kababayans, which represents .45% to the total
employment or 212,247 jobs in 2023.
It is only noteworthy to mention the mandatory social and
environmental expenditures of the mining sector which covers the Annual
Environmental Protection and Enhancement Program, Safety and Health Programs,
Annual Social Development and Management Programs totaling to P26.05 billion
from 2012 to 2021.
With our nation having some of the world’s largest mineral
reserves in Nickel, Copper, Cobalt, Chromite and Gold, among other precious
metals, the Philippines is strategically poised into the growing global demand
for green technologies. By responsibly harnessing our abundant mineral
resources, we can ensure maximum benefit for the Filipino people while
contributing to a more sustainable future.
Mr. President, the strategy framework outlined in the
Philippine Development Plan for 2023-2028 identifies the revitalization of our
industrial capacity through science, technology, and innovation-led
industrialization as key objectives. This revitalization seeks to achieve
several interconnected outcomes: the creation of higher-quality employment
opportunities, the expansion of our domestic market and supplier network, the
development of robust value chains, and the enhancement of linkages across
sectors.
Mr. President, we wholeheartedly support this strategic
vision. The bill before us today serves as a critical building block in
realizing the objectives of the Philippine Development Plan. This measure seeks
to foster an enabling policy environment especially with an eye towards being
more competitive with our regional competitors, by correcting the current
mining tax regime that is fraught with complications. This shall enable the
state to harness the full potential of our national mineral resources by reforming
how the government derives its revenue share from the development and
utilization of its resources.
This bill proposes a modernized tax regime specifically for
large-scale mining activities—those involving exploration, feasibility,
development, utilization, and processing, under a mineral agreement or
financial or technical assistance agreement, as defined in Republic Act
No. 7942 or the Philippine Mining Act of
1995. The proposed regime is designed to be fairer, simpler, more competitive,
and sustainable.
This measure empowers the government to levy more revenues
and royalties on all mining operations, whether inside or outside mineral
reservations. Furthermore, the measure introduces a windfall profits tax based on
simplified 5-tier rates ranging from 1% to 10%. This proposed concept will
enable the government to have a larger share of the profits in cases when metal
prices are high and mining companies are earning more. This will also
streamline compliance and administration for both industry and government,
while minimizing opportunities for aggressive accounting practices.
This measure also seeks to strengthen safeguards against tax
minimization. It limits the prospect of thin capitalization by setting a cap on
how much companies can rely on debt financing to reduce their taxes through
deductible interest expenses. Additionally, this bill also seeks to protect
against ring-fencing by treating each mining operation of a company with
multiple projects as a separate taxable entity, preventing them from offsetting
profits from one project with losses from another to lower their overall tax
bill.
Should these reforms come to fruition, the DOF estimates
that the proposal will garner an average of Php 6.26 billion annual additional
income for our nation’s coffers.
For our local government units, whose concerns were
highlighted by our Senate President Francis "Chiz" Escudero, this
measure establishes a framework that streamlines the speedy and timely release
of their rightful share of taxes generated from mining royalties and other
fees. This will empower LGUs to utilize their revenue from mining sources for
the benefit of their constituents in a more timely and efficient manner.
Kasama rin sa pagpapalawig ng suportang makukuha ay ang
royalty na makukuha ng mga Indigenous Cultural Communities/Indigenous Peoples
(lCCs/lPs) na isusuma base sa 2 percent ng total gross revenues of minerals
produced from the ancestral domain.
Finally, Mr. President, this bill champions transparency and
accountability in the management of our nation's mineral resources by
institutionalizing a robust mechanism for public disclosure and scrutiny of
extractive industry data. This aligns us with international best practices,
ensuring that the wealth generated from our resources is managed openly and
responsibly for the benefit of all Filipinos.
Ginoong Pangulo, habang kinikilala natin ang potensyal ng
industriyang ito na palaguin ang ating ekonomiya, mahalagang balansehin ito sa
mga karapatan at interes ng iba pang sektor ng lipunan. Umaasa tayo na sa
pamamagitan ng pagpapalakas ng mga alituntunin para sa transparency at
accountability, matutulungan natin ang DENR, mga LGU, at maging ang Civil
Society na pangalagaan ang ating kalikasan.
Mr. President, my dear colleagues, the passage of this bill
represents a pivotal moment in our nation’s journey towards a more prosperous
and sustainable future. While we know that this won’t fix everything that needs
fixing in the industry, we take heart knowing that by enacting these reforms,
we are not only modernizing our mining tax regime but also laying the
foundation for responsible resource management that benefits all Filipinos.
This legislation demonstrates our commitment to maximizing
the value of our mineral wealth, fostering economic growth, and ensuring that
future generations inherit a nation rich in both natural resources and
opportunities. Let us seize this moment to create a legacy of responsible
stewardship and shared prosperity. I urge my esteemed colleagues to join me in
supporting this proposed measure.
Maraming salamat po.