At least 17 cities and municipalities in 10 provinces would have to find alternative revenue sources soon, as they are likely to lose as much as 60 percent of their annual income due to the decision of the Department of Environment and Natural Resources (DENR) to close or suspend the operations of 28 mining sites across the country.
Latest data released by the Department of Finance (DOF) showed these local government units (LGUs) will be saying good-bye to P821 million in total annual revenues from the mines they are hosting.
Finance Secretary Carlos G. Dominguez III has directed treasurers of the affected LGUs to submit their respective reports on the complete revenue impact of the DENR closure and suspension orders.
He said based on the reports, three municipalities will lose revenues a little over 50 percent of their current operating income if the affected mine sites are 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],” Dominguez said in a forum.
The estimates submitted by the Bureau of Local Government Finance (BLGF) to the DOF showed Carrascal will lose P198.3 million of its mining revenues, representing 62.3 percent of its total operating income. Tagana-an will lose P70.3 million, or 54 percent, and Tubajon will shed P38 million, or 55.4 percent, if the DENR order is implemented.
The Mining Industry Coordinating Council (MICC), which is cochaired by the DOF and the DENR, met earlier in the month 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 multistakeholder team was also formed to review existing mining operations in consultation with the LGUs, under MICC Resolution 6.
“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 said.
The latest BLGF estimate on revenue losses to be incurred by LGUs, which is an increase from the initial P653 million submitted earlier, 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 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-percent compliance of local treasurers ordered to submit [fiscal year] 2016 LGU data. The total estimated potential revenue loss from the direct payments of mining firms and the shares from mining taxes of affected LGUs amounted to P821.13 million,” BLGF Acting Executive Director Nino B. Alvina said in his report.
Of the total 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.
According to Alvina, the share of the affected LGUs from mining taxes collected by the national government accounts for P481.17 million. The BLGF earlier said the provinces affected 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.
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.
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 area receives a 35-percent share, 40 percent goes to the municipality and the remaining 25 percent to barangays where the mining site is located, Alvina added.
Image credits: AP