By Charmaine A. Tadalan, May 29 2019; Business World
https://www.bworldonline.com/senate-body-nearly-adopts-house-mining-tax-version/
Image Credit to Business World
THE SENATE Committee on Ways and Means on Tuesday minimized differences with the House of Representatives’ version of a proposal to increase the government’s share in mining revenues in a bid to fast-track final legislative approval.
Committee Chairman Senator Juan Edgardo M. Angara sponsored Senate Bill No. 2235, or “An Act Establishing the Fiscal Regime for the Mining Industry,” which proposed to reduce the royalty fee on large-scale mining within mineral reserves to three percent of gross output from five percent currently and introduce a 1-5% margin-based royalty on those outside mineral reserves.
“Our version is similar to the House of Representatives’ version except that the committee chose to remove the inclusion of the non-metallic mining operations,” Senator Angara said in his sponsorship speech, Tuesday.
“Throughout our hearings it became apparent that a majority of non-metallic mining in the country is in cement production. Stakeholders explained that any imposition of taxes on cement could result in higher prices which… could impair the government’s ‘Build, Build, Build’ program.”
The House version, which bagged final approval in November 2018, will impose a 1-10% margin-based windfall profit tax on income before corporate income tax as well as a provision discouraging excessive debt funding by disallowing deduction of interest expense once a company records a 3:1 debt-to-equity ratio.
The bill defined margin as the “ratio of income from mining operations before corporate income tax on gross output,” while gross output is “the actual market value of minerals or mineral products from each mine or mineral land operated as a separate entity, without any deduction for mining, processing, refining, transporting, handling, marketing or any other expenses.”
The royalty will be imposed on top of other taxes like corporate income tax, excise tax which Republic Act No. 10963 doubled to four percent, the royalty to indigenous people and local business tax.
TOBACCO TAX APPEAL
Meanwhile, Senate Majority Leader Juan Miguel F. Zubiri said he hopes the House will adopt the Senate’s version of the proposal to raise tobacco excise tax as the 17th Congress’s days are numbered.
“We do not have any more material time for a bicam[eral conference committee]… dahil (because)… it’s Eid al-Fitr (holiday) on Wednesday; so meaning last day na namin ‘yung (it will be our last day next) Tuesday,” Mr. Zubiri told reporters on Tuesday.
Any measure that fails to secure ratification in the current Congress will have to be refiled in the 18th Congress that opens on July 22.
“Kung ma-approve namin s’ya (If the Senate approves the bill) latest Monday, we’ll transmit immediately to the House, so that they can adopt our version or come up with a quick bicam[eral conference committee] for ratification on Tuesday the latest.”
The Senate proposed under SB 2233 to increase excise tax on tobacco products to P45 per pack from P37.50 in Jan. 2020; and by P5 annually until it reaches P60 in 2023. It will then be increased by five percent every year thereafter.
In comparison, House Bill No. 8677, which was approved in December last year, proposed rates of P37.50-45 by 2022 and a four percent increase annually thereafter.
At present, a P35 rate per pack is imposed on cigarettes, after RA 10963 raised it to P32.50 per pack from P30 in January 2018 and to P35 beginning July 2018. It is scheduled to go up to P37.50 in January 2020.
Asked on chances of the House adopting SB 2233, House Majority Leader and Capiz 2nd district Rep. Fredenil H. Castro said in mobile phone message, Tuesday, there is “no harm”, while Nueva Ecija 1st District Rep. Estrellita B. Suansing, chairperson of the House Ways and Means Committee, said in a separate text message that her committee has received “no instructions yet from SPGMA (Speaker Gloria M. Arroyo).” — Charmaine A. Tadalan