Villanueva amendments to TRAIN bill raise coal tax from P10 to P300 per mt; double mining resource tax

November 28, 2017 - 12:35 AM
Senator Joel Villanueva at a budget hearing at the Senate in Sept. 13, 2017 file photo. PHOTO BY GEREMY PINTOLO, PHILSTAR

MANILA – Senator Joel Villanueva on Monday night introduced amendments to the Tax Reform for Acceleration and Inclusion (TRAIN) Bill proposing to increase taxes on coal and mining.

With 11 affirmative votes, one negative and one abstention, the Senate approved the amendment raising the coal tax from P10 per metric ton to P300 per metric ton.

The Senate also approved to increase the excise taxes on metallic and non-metallic mining resources from 2% to 4%.

Underscoring the need to jack up the coal tax, Villanueva noted that it “has remained unchanged for decades since 1988. Four years before that, our excise tax was set at P50.00 per metric ton under Executive Order No. 1933. In 2017 value, that P50.00 excise tax is equivalent to about P600.00 per metric ton. However, we are instead collecting a P10.00 tax per metric ton in the present – the same rate we have been imposing almost 30 years ago.”

Villanueva, vice chairman of the Senate committee on ways and means, said the government is currently not only imposing a tax rate pegged at 1988 level, but also exempting the local industry from paying the excise tax since 1976.

“In the 1970’s, the coal mining industry could be deemed as an emerging industry in need of government support. In our desire to expand the industry, we needed to attract private sector participation in the coal mining industry. With this idea in mind, our government gave away generous incentives to private contractors to make sure that coal mining venture will be lucrative. This was exactly the intention of Presidential Decree 972 or the Coal Development Act of 1976,” Villanueva said.

“And, indeed, coal mining became a very lucrative venture throughout the past decades. Over the past 10 years alone, the local production expanded by almost six folds – from 2.6 million metric tons in 2006 to 12.1 million metric tons in 2016. The market for our coal even expanded in the international market, as we now export more than half of what we produce at 6.8 million metric tons as of last year,” Villanueva added.

However, despite the overwhelming expansion of the coal industry over the decades, Villanueva said that the government remained generous to the mining firms, even at the expense of the people. Currently, the government only receives at least 3.00% from the total proceeds from coal. The local communities which host these coal production – who are at the frontline of the risks posed by the operations – receive a measly 1.2% from the total proceeds.

“We strongly believe that it is high time we change this system. We have given the coal industry the opportunity to grow, in fact, even in spite of the environmental cost they pose and labor violations they commit,” Villanueva stressed.

Both Villanueva and Sen. Loren Legarda also proposed to lift the exemption enjoyed by the local coal mining industry from paying excise tax.

“We have been generous for too long already. We have exempted the local industry from paying taxes under PD 972 since 1976. I think it is high time the industry pays its rightful dues to the country,” Villanueva concluded.


The Senate, meanwhile, doubled the excise taxes on metallic and non-metallic mining resources from 2% to 4%.

Sen. Ralph Recto first moved to introduce the mining tax increase into the tax reform package. Villanueva and Sen. Francis Escudero later supported the motion and requested to put it to a vote. The proposal won with 10 affirmative votes, three negative, and two abstention.

“We wish to correct the lopsided sharing of metallic and non-metallic mineral mining proceeds in the country. Compared to our neighboring countries like Vietnam, Indonesia, and Papua New Guinea, the Philippines has one of the lowest mining excise taxes at 2% rate,” Villanueva stressed during the deliberations.

Globally, the Philippines ranks one of the highest in terms of resource potential. However, throughout the years, Villanueva said the mining industry’s contribution has remained small: less than 1% of the GDP; and less than 1% of the country’s total employment. Currently, the sum of government’s take only stands at 19% of the gross proceeds of the mining industry.