The order 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 17 affected cities and municipalities in 10 provinces over P821 million annually in foregone revenues, according to updated estimates submitted to the Department of Finance (DOF).
DOF Secretary Carlos Dominguez III, who earlier directed local treasurers to submit their respective reports on the complete revenue impact of the DENR closure and suspension orders on host local government units (LGUs), told the media that three of the municipalities will lose revenues representing over 50 percent of their current operating income if the affected mine sites are shut down or forced to suspend operations.
“One is the municipality of Carrascal (in Surigao del Sur), then you have Tagana-an (in Surigao del Norte) and Tubajon (in Dinagat Islands),” said Dominguez in a recent media forum.
The updated estimates submitted by the Bureau of Local Government Finance (BLGF) to Dominguez show Carrascal will lose P198.3 million of its mining revenues, which represent 62.3 percent of its total operating income, while Tagana-an will lose P70.3 million or 54 percent of its total operating income. Tubajon will shed P38 million, or 55.4 percent of its total operating income if the DENR order is implemented.
The Mining Industry Coordinating Council (MICC) co-chaired by the DOF and DENR met last Feb. 9 to discuss the closure and suspension orders, and issued a resolution emphasizing that due process will be observed in assessing the status of mining operations in the country..
A multi-stakeholder team was also formed by the MICC to “review existing mining operations in consultation with the LGUs.”
The review shall be based on “the guidelines and parameters set forth in the specific mining contract and in other pertinent laws, taking into account the valid exercise of the State’s police power to serve the common good of the poor,” the MICC resolution likewise read.
MICC’s technical review team is set to hold its organizational meeting today (Feb. 20)
The latest estimates, which is an increase from the initial P653 million submitted by the BLGF, is based on the 100 percent compliance to Dominguez’s directive of city and municipal treasurers in the affected LGUs.
BLGF’s estimates do not include yet the projected income losses of the LGUs that host 75 mine sites whose mineral production sharing agreements (MPSAs) were ordered cancelled by the DENR last week.
“…the Bureau’s updated estimates on the impact on local finance of LGUs hosting mining firms ordered for suspension and closure by the DENR…..constitutes 100% compliance of local treasurers ordered to submit [Fiscal Year] 2016 LGU data,” BLGF acting executive director Nino Alvina said in his latest report to Dominguez.
“The total estimated potential revenue loss from the direct payments of mining firms and the shares from mining taxes of affected LGUs amounted to P821.13M,” Alvina added.
Alvina said that of this amount, local collections of the affected LGUs from mining firms amounted to P340 million, comprising real property taxes (RPTs) of P53.54 million, P263.13 million from business tax, fees, charges and other local charges, and P23.29 million from provincial revenues.
The share of the affected LGUs from mining taxes collected by the national government account for P481.17 million, Alvina said.
In its earlier report to Dominguez, the BLGF said the provinces affected either by the closure or suspension orders 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 showing a lower estimate of P653 million in revenue losses to LGUs on 2015 data.
According to Alvina, LGUs directly collect from mining firms operating in their municipalities and cities the following taxes and fees: RPTs, 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.
Local treasurers in LGUs affected by the mining closure and suspension orders were able to 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.