Gina Lopez and her supporters justify the potential yawning gap in GDP caused by the wholesale closure of the mining industry by saying that the industry as a whole only contributes 2% in taxes which, on the face of it, sounds like a tiny loss the nation could easily shoulder.
However, let's say that this is being somewhat economical with the truth. On the face of it that 2% is indeed true but only regarding excise tax which alone totaled P1.1 billion from January to July 2016 and is just one of the many taxes and fees the industry pays.
What is conveniently omitted from the sums is the royalties to mineral reservations, royalties to indigenous communities, value added tax, dead rent, occupation fees, community tax, mine waste fees, tailing fees, filling fees and other charges.
Revenue from mining has gone up year on year with the government collecting P20.6 billion in taxes from mining in 2012, P24.4 billion in 2013; P32.7 billion in 2014; and P29.57 billion in 2015 in direct tax to finance public education, public health, public housing, public roads, various livelihood training and seminars.
The government stands to lose at least P653.64 million in revenues from the possible closure and suspension of 28 mining firms in the country, initial data from the Department of Finance (DOF) showed.
“It will be very difficult for us to immediately cover this shortfall,” said Finance Secretary Carlos Dominguez III.
After paying these direct taxes and fees to government, a mining firm must also spend more to build its own school, training center, hospital, clinic, housing, roads, drainage and street lighting plus environmental protection and management programs which costs hundreds of millions a year and benefits the 200,000 workers who would find themselves unemployed if the mines were shut down.
“For the national (government) it’s going to hurt that we’re not going to get the mining revenue, but it’s not going to be fatal.” Dominguez III has said. “But in some municipalities, that’s the only real income they have.” Sounds pretty fatal for those municipalities to me.
Dominguez has warned that it would take five years to cover the government’s revenue shortfall from Lopez’s decision to close mining companies and cancel mineral production sharing agreements without due process.
So whichever way you look at it we have a lose, lose, lose situation. The government loses twice, firstly in tax revenue shortfall and then through court cases bought by the mining companies for breach of contract.
Dominguez has already admitted “If they [mining companies] found that due process was not followed, they will sue the government. So we will pay what the courts ask us to pay and we will honor that if we lose.”
The third and arguably biggest loser is, of course, local communities who will see their income and livelihoods disappear virtually overnight. For them, that often conveniently miss-quoted loss of 2% tax take equals a 100% loss of their hopes and dreams for the future.
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