The directive of the Department of Environment and Natural Resources (DENR) to either shut down or suspend the operations of 28 mine sites across the country will cost the affected local government units (LGUs) in 10 provinces over P650 million yearly in foregone revenues, according to initial assessments made by the Department of Finance (DOF) based on 2015 data.
In a preliminary report to Finance Secretary Carlos Dominguez III, the Bureau of Local Government Finance (BLGF) said that losses such as taxes, fees and other charges directly collected by the local governments from mining firms are estimated at P441.92 million, while the LGUs’ share from mining taxes collected by the national government account for another P211.72 million.
“The total estimated potential revenue loss of the affected LGUs from all sources, based on 2015 data, amount to P653.64 million,” BLGF executive director Nino Alvina said in his preliminary report to Dominguez.
The BLGF said the provinces affected either by the closure or suspension order are Benguet, Nueva Vizcaya, Palawan, Cebu, Bulacan, Zambales, Eastern Samar, Dinagat Islands, Surigao Del Norte, and Surigao Del Sur.
Alvina said the BLGF based its initial report to the Finance Secretary on 2015 data because reports for 2016 will come in by the end of the first quarter (March 31).
He said the BLGF had sourced its data from the preliminary estimates of local treasurers and their electronically submitted Statements of Receipts and Expenditures (eSREs) that now cover reports on earnings from mining and other extractive industries.
The preliminary reports would still have to be reviewed because some LGUs are hosting two to five mining projects, Alvina said.
Dominguez last week instructed city and municipal treasurers in areas hosting mine sites to submit their respective reports on the final and complete revenue impact of the DENR directive by the end of this work week or by Feb. 10.
According to Alvina, LGUs directly collect from mining firms operating in their municipalities and cities the following taxes and fees: Real Property Tax (RPT), Local Business Tax, Mayor’s Permit Fee, Regulatory and Administrative Fees, and Occupation Fees.
“The provinces of the affected component municipalities are also imposing (i) Governor’s Clearance, (ii) Verification Fee, (iii) Environmental Fees, (iv) Soil Depletion Tax, and (iv) Processing Permits for Vessel,” Alvina said.
He said that for the RPTs imposed by cities, the LGU gets a 70 percent share while the remaining 30 percent is shared with the barangays, of which half goes to the barangay directly affected, and the other half shared equally by component barangays.
For the RPTs collected by provinces, the province receives a 35 percent share, while 40 percent goes to the municipality, and the remaining 25 percent to barangays where the mining site is located.
Alvina said that RPTs account for some P43.97 million of the estimated revenues that LGUs will lose from the closure and suspension of mining operations while business taxes and other fees and charges account for P358.56 million, and provincial revenues, P39.9 million.
As for their share in mining taxes imposed by the national government, Alvina said the estimated losses of P211 million of the affected LGUs comprise 43 percent of their total share from National Tax Collections.
Dominguez has given a short one-week deadline for local treasurers in LGUs affected by the mining closure and suspension orders to submit their respective reports as they could already quickly access data through the web-based Environment and Natural Resources Data Management Tool (ENRDMT).
In Department Order 049-2016 issued in September last year, Dominguez instructed local treasurers to include in their quarterly and annual financial reports to the DOF all environment and natural resources revenues and expenditures, particularly the payments made by the mining and other extractive industries to their respective LGUs.
Municipal and city treasurers have been forwarding their Statements of Receipts and Expenditures electronically since 2011 and are now required to submit them through the ENRDMT.
Dominguez had asked for the impact assessment reports because alongside the massive loss of jobs and its effect on the national economy, the DENR’s move might imperil the fiscal state of the affected LGUs, given that mining companies account for a hefty part of the tax revenues collected by local governments in municipalities hosting mine sites.
The finance secretary said last weekend that these assessment reports will aid the government in coming up with a comprehensive strategy to address the impact of the DENR move on the employment and fiscal situations in the communities where the concerned mining sites are located.
Dominguez said he has already called for a meeting of the Mining Industry Coordinating Council (MICC), which he co-chairs, to assess the impact of the DENR directive.
“We’re just waiting for the response of the other members of the MICC. So we want to have it next week as soon as possible,” Dominguez said in last week’s chance interview.
Dominguez said that initially, he had discussed with the heads of the Office of the Cabinet Secretary and the Departments of Labor and Employment (DOLE), Social Welfare and Development (DSWD), Public Works and Highways (DPWH), and Trade and Industry (DTI) how to address the impact of the DENR move on jobs and LGU revenues in the areas hosting the affected mining projects.
He said that during their discussion, DSWD Secretary Judy Taguiwalo said that her department will carry out a census to determine the extent of the jobs displacement, while Cabinet Secretary Leoncio Evasco suggested providing jobs under the government’s national greening program.
DOLE Secretary Silvestre Bello III informed Dominguez that emergency employment can be provided to displaced workers but only for a temporary time and in limited volume, while DTI Secretary Ramon Lopez said he will also pitch in proposals on how to generate jobs in the affected areas.
DPWH Secretary Mark Villar, meanwhile, said he will look into additional projects in communities hardest hit by the closure of mining operations so that jobs for the laid-off workers can be provided under a proposed supplemental budget.
“The Cabinet members are obviously also very concerned about unemployment and people not having income, so we will put our shoulder to the wheel to address that issue first,” Dominguez said.
Dominguez said his primary concern is the negative impact of the DENR directive on jobs, second on municipal finances and third on the country’s GDP growth.
“The national impact, the impact on the GDP—that, of course is a concern. But the people’s welfare is our first concern,” he said.