Albay Rep. Joey Sarte Salceda on Friday called for the passage of the proposed fiscal regime for the mining industry, saying the industry is a potential job creator in the post-COVID future.
Salceda, chairman of the House committee on ways and means, emphasized the natural wealth potential of the Philippines, but observed “key deficiencies in the country’s extractive industry governance framework,” some of which can be resolved by a “coherent tax regime.”
“The country is the fifth most mineral-rich country in the world for gold, nickel, copper, and chromite. It is also home to the largest copper-gold deposit in the world. Estimates suggest that up to 840 billion dollars of untapped mineral wealth is in Philippine soil,” Salceda said in his keynote speech during the Extractive Industry Transparency Initiative (PH-EITI) National Conference on Thursday.
“This is not to mention the 17.1 billion barrels of oil deposits that China’s Ministry of Geology and Mineral Resources estimates to be in the Spratlys, or the 190 trillion cubic feet of natural gas that the US Energy Information Administration believes to be in the area. Maricel V. Cruz
“These resources, if extracted and managed properly, could make the Philippines one of the richest countries in the world,” Salceda added.
The industry could create well-paying jobs post-pandemic but stressed the need for a mining trust fund supported by tax revenues from mining as a “rainy day fund” for when mineral prices are low, he said.
“Of course, that’s [high prices] not forever. Manufacturers will find ways to reduce metallic content when the metals get too expensive. When that happens, prices will inevitably fall. We must be ready. The tax regime is not everything, but it’s a necessary step we cannot skip,” Salceda said.
He noted that although the issuance of Executive Order 130, amending Section 4 of Executive Order No. 79 s. 2012, lifted the moratorium imposed by the latter on new mining agreements, the Executive Order still has areas for improvement.
“First, neither Congress nor the Department of Finance, the country’s fiscal policymakers and fiscal administrators respectively, are given a specific role in this process by the new EO,” Salceda said.
Salceda also observed that the EO delegates some powers that are not supported by law, including the power of the Department of Environment and Natural Resources (DENR) to negotiate tax agreements with miners.
Salceda also said it is the DOF that has the experience in financial management and should therefore negotiate revenue sharing agreements on the government’s behalf.
Salceda, however, emphasized the high potential of the mining sector post-pandemic.
“As the world shifts towards electric-powered transport, and as the digital economy continues its ascent, the global economy will require more minerals, especially nickel and copper, which we abound in. Nickel prices are once again in 5-year high levels. So is copper and cobalt, elements needed for e-vehicle batteries,” Salceda said.
“Regardless of the grade of minerals we produce, demand is high across the board. It can only mean well for our mining industry’s bottom lines in the medium-term,” Salceda added.
Salceda stressed the revenue-generating potential of the industry if a tax regime is enacted.
“The tax revenues are also crucial for economic recovery. The proposed regime will generate P7.2 billion in incremental revenues on the first year and P37.9 billion over the next 5 years. These are closed-group estimates.
“They are probably conservative, as more mining agreements are made and as mineral prices continue to boom. So, these revenues will play an important role in helping stabilize our fiscal situation,” Salceda said.