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PIA Press Release

LMP calls for IRR on release of mining revenue share directly to LGUs

Tacloban City (October 23) -- The League of Municipalities of the Philippines (LMP), during the meeting of the National Directorate on October 16, passed a resolution calling for the formulation of Implementing Rules and Regulations on the release directly to the Local Government Units, their share of mining revenues.

In passing said Resolution, the League of Municipalities of the Philippines which has 1,510 member-municipalities noted that Executive Order No. 270, as amended, states that it shall be the policy of the Government to promote responsible mineral resources exploration, development and utilization in order to enhance economic growth, in a manner that adheres to the principles of sustainable development and with due regard for justice and equity, sensitivity to the culture of the Filipino people and respect for the Philippine sovereignty.

LMP also noted that the Local Government Code provides that the local government units shall, in addition to the internal revenue allotment, have a share of forty (40) percent of the gross collection derived by the national government from mining payments of mining companies, taxes fees and charges generated from the utilization and development of national wealth within their territorial jurisdiction.

Results of a study conducted by the Chamber of Mines of the Philippines supported by the United States Agency for International Development on "Financial Transparency in the Mining Industry," showed that the Department of Budget and Management has either under-remitted or has not remitted at all the LGU share of excise taxes.

In 2005, report from the Bureau of Internal Revenue indicated that excise tax payments by mining companies to the national government amounted to P489.57 million or roughly US $10.88 million, and LGU share of this amount is P195.83 million.

The Chamber of Mines and the Department of Environment and Natural Resources have on several occasions lobbied for the passage of the Domogan Bill that seeks to amend certain provisions of RA 7160 or the Local Government Code to mandate persons or companies engaged in the utilization and development of national wealth to pay directly to the LGUs and the national government what are due to them respectively from what they are obligated to pay as national wealth taxes.

Although the Bill has passed second reading in the Lower House, it did not in the Senate and so the bill was refilled as HB 1012 by Congressman Domogan.

Congress tried to remedy the issue by creating in the 2007 Annual General Appropriation Act, a trust fund for the 40% excise tax collected, for direct release by the BIR to LGUs on a quarterly basis, but no implementing guidelines have been issued by the relevant government agencies until the present time.

There is therefore a need to provide Implementing Rules and Regulations to implement the direct release to LGUs on a quarterly basis, of their rightful share of the excise tax on minerals and mineral products produced in their respective areas of jurisdiction, including the monitoring of he tax flows as a necessary measure for the adoption of the Extractive Industry Transparency Initiative, a mechanism for the promotion of transparency and accountability in the mining company. (PIA 8) [top]

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