To mitigate impact on environment, community safety
Recto seeks higher excise tax on mining, quarrying

Sen. Ralph G. Recto yesterday said mining and quarrying companies should pay a higher excise tax on their products to compensate for the potential damage that their activities could inflict on the environment, indigenous peoples and the general well-being of the host communities.

"A review and subsequent adjustment in the excise tax rates is absolutely timely with the news of landslides, river poisoning and tribal dislocation resulting from mining and quarrying now hogging the headlines," Recto said, referring to the "Good Friday" landslide in a gold mining site in Pantukan town, Compostela Valley, which has so far claimed eight fatalities.

Recto, who chairs the Senate ways and means committee, noted that excise tax rates on metallic minerals such as gold, copper and chromite have been unchanged since 1994 when Republic Act 7729 was enacted and effectively reduced the excise tax rates on metallic and non-metallic minerals such as quarry resources including granite, limestone and clay.

With the passage of RA 7729, the excise tax rates were trimmed down: for copper and other metallic minerals, to one percent (1 %) until 1997 and slowly increased to its present rate at two percent (2%); and for gold and chromite, two percent (2%).

Under the National Internal Revenue Code (NLRC), as amended, the rates were uniformly pegged at two percent (2%) for both metallic minerals and quarry resources.

An excise tax (sometimes called a duty of excise special tax) commonly refers to tax on the sale or production for sale of specific goods; or as a tax on a good produced for sale, or sold, within a country. An excise tax is one levied on specific goods or commodities produced or sold within a country, or on licenses granted for specific activities like mining or quarrying.

Recto for this purpose has filed a bill that would bring the current uniform two percent excise tax to seven percent (7%) and help bring in fresh revenues of P1.7 billion to a high of P3.3 billion annually from the current yearly average of only P702.7 million.

"With the passage of this bill, the national government can look forward to higher revenues than it has collected in recent years," he said in filing Senate Bill (SB) 2754.

He stressed the proposed increase in the excise tax on mineral and quarrying activities would not even be commensurate to the natural hazards brought about by mining and quarrying activities to the environment particularly in areas that are rich in biodiversity, in geohazard zones or within the ancestral domain of indigenous peoples.

Recto noted that mineral wastes extracted from mining and quarrying cause sulfurous dust clouds that result in acid rain while abandoned strip mines are often used as unregulated landfills for hazardous wastes.

"Mine tailings and their associated metal contaminants, such as arsenic, cadmium, lead, mercury, sodium cyanide, and zinc can contaminate nearby water sources rendering them useless as sources of food, water, and livelihood. Mining in upland areas further reduce forest cover and leave a toxic heritage for succeeding generations," he further noted.

Recto stressed the national government and the host local government units (LGUs) should equally partake of the additional revenues from the increased excise tax.

He said LGUs will have direct utilization of the 3.5 percent of the proposed 7 percent excise tax rate on metallic minerals and quarry resources and channel it to support the Special Education Fund (SEF) to address "the perennial shortages of classrooms, tables and chairs, books, teaching aids and other educational materials."

The senator added the national government, for its part, could use the additional revenues in launching comprehensive programs to mitigate the environmental, social and safety-security impact of small-scale and large scale mining and quarrying.