PH’s EITI application in 2013, Casino-Hontiveros mining socialism

* Written on June 05, 2013.

A press statement by US Ambassador to the Philippines, Harry Thomas, Jr.,

Congratulations, Philippines: Raising the Bar on ExtractiveResources Transparency and Accountability, the Ambassador said,

…  On May 22, I was pleased to see the Philippines became a candidate member at the latest Extractive Industries Transparency Initiative (EITI) Global Conference held in Sydney, Australia.   EITI is a voluntary international system through which governments reaffirm their commitment to accountability and transparency for their country’s oil, gas, and mining industries. By working together, the government, private sector, and civil society are achieving broader agreement on higher standards for the extractive industry. 

The concept behind EITI is simple. Member governments partner with the private sector and civil society organizations to publish an annual report that compares two figures: revenues that the government reports it received, with what extractive companies report they have paid for their oil, gas, and mining activities. This system incentivizes honesty and provides data necessary for accountability. 

… at the latest EITI Conference recently held in Sydney, members formally agreed on a set of strategic changes to EITI.  The aim is to make EITI reporting more comprehensive, reliable, and easier to analyze. The reforms will also require governments to provide citizens basic information about the extractives sector in their country, including what licenses have been awarded and to whom, how much is being produced, and the role of state-owned oil companies in the sector.  In addition, EITI will encourage governments to voluntarily go one step further by publishing their actual contracts with companies. Transparency benefits U.S. companies because it helps them to better understand a country’s operating environment as they consider investment decisions.

This is a good development. Not only payment and collections will be published and made transparent, but also existing and new contracts entered by governments. Meaning if there are mining or oil drilling operations and they are not found in the EITI website (http://eiti.org/), that means these are illegal or unauthorized or under-reported activities.

min1I checked the EITI website, one report there says:

… The decision of the Board on the status of the Philippines in full: 

The EITI Board admits the Philippines as an EITI Candidate country on 22 May 2013. In accordance with the EITI Rules, the Philippines is required to publish their first EITI Report within one year and six months of becoming a Candidate (by 22 November  2014) and to submit a final (MSG endorsed) Validation Report to the Board within two years and six months of becoming a Candidate (by 22 November 2015). Failure to meet either of these deadlines will result in delisting.

As an EITI Candidate country, the Philippines has to start disclosing payments from its extractives sector, and meet all the requirements in the EITI standard within 2.5 years to become EITI Compliant.

One advantage of EITI is that it is not owned or controlled by the UN or other multilaterals or a particular government. Private companies in the extractive sector and governments are both members and they both pay for the funding and maintenance of this body.

Two and a half years before the Philippines — government and the mining and oil companies here — can become EITI Compliant (or a member?), this is a good opportunity to unmask certain hypocrisies by the Philippine government. The government, national and local units, usually say they welcome big investors to create lots of jobs here, responsible mining and extraction of resources, then puts up lots of regulations, restrictions and prohibitions. As if wishing that only angels, not humans, should engage in mining and other extractive activities.

EITI membership will force the Philippines and other governments to declare publicly how much they (both national and local government units) have collected (taxes, fees, fines and mandatory contributions) from the extractive companies, and the latter will declare how much they have paid to the government.

Will companies also declare how much they paid to expensive law firms and accounting firms to make sure they have properly complied with various government agencies (city government, provincial government, BIR, SEC, MGB-DENR, DOLE, DOH, etc.) for various taxation, labor, health, environmental standards, and avoid punitive penalties. When regulations are too many, the cost of compliance can be as big if not bigger than the actual taxes paid.
————

* Written June 25, 2013.

Casino-Hontiveros mining socialism

Today is part 2 of the oral debate at the Supreme Court between the anti-corporate mining groups led by former Party-list Congressman Teddy Casino and Congresswoman Risa Hontiveros, and the Chamber of Mines of the Philippines (COMP). The former simply wants the government to confiscate as much money and revenues from the big mining corporations as possible because of their exploitation of the country’s mineral and forest resources, while being silent about similar exploitation by  the so-called “small scale mining” groups and individuals.

While data on various payment in taxes, fees, royalties and penalties made by large mining companies are available, there is zero data available for taxes and other payment by the small scale metallic (gold especially) mining. See also this comparison of mining taxation policies of Chile vs. the Philippines.

min1
The petitioners want the SC  to declare Secs. 80 and 81 of RA 7942 as unconstitutional and then what, the SC will make its own tax rates in mining and insert them as the new Secs. 80 and 81 of this law? Can the SC legislate taxes and tax rates? This is not possible unconstitutional itself because such function is assigned by the Constitution exclusively to Congress, the House and Senate crafting a synchronized bill, and must be signed by the President.

I am wondering why these ex-legislators simply cannot wait for the new 16thCongress to convene just four weeks from now and introduce an amendment to RA 7942, say government should get 90 to 95 percent of the net revenues of big mining companies and go for explicit mining socialism. Teddy Casino and Risa Hontiveros are socialists anyway, I do not think they will deny their affinity with near- or full-socialism and have social and economic equality in society, demonize and over-tax the rich, over-subsidize the poor including the lazy and irresponsible.

Below are some news reports on this subject.

min2

(1) Chamber of Mines files SC motion to nullify Hontiveros petition
Philippine Star, June 21, 2013

COMP argued that since the La Bugal ruling – the longest in Supreme Court history which took six years for the high tribunal to deliberate on – there has been no material change in the circumstances of the Philippine mining industry.

“There is no compelling reason for the high tribunal to abandon its previous ruling,” COMP said in its motion.

Sec. 80 stipulates that the government share in mineral production sharing agreement (mpsa) is limited to excise taxes.

Sec. 81,on the other hand, limits the government’s share in Financial and Technical Assistance Agreement  (FTAA) to taxes, fees and royalties.

COMP said about P173 billion ($4 billion) in mining investments have been poured into the country since 2004 following the high court’s ruling, making the industry a significant contributor to national development, added COMP….

(2) SC to resume debates on constitutionality of mining law
Sun Star, June 24, 2013

Debates started last April as the SC wanted to know whether the mineral production sharing agreement (MPSA) is unconstitutional for allowing an inequitable sharing of wealth (Section 80) and the government surrenders control and beneficial use of mineral resources under the financial and technical assistance agreement (FTAA) under Section 81.

The Chamber of Mines of the Philippines (COMP)… also said an equitable revenue sharing in mining is a question for the legislative and executive branches of government to decide….

(3) On eve of 2nd day of SC oral arguments, groups push for alternative mining law
GMA News, June 24, 2013

In a press conference in Manila, Erwin Quinones of the SOS-Yamang Bayan, one group opposed to the law, said that they wanted an “Alternative Minerals Management Bill”, in which mining activities are “regulated and needs-based.”

Quinones said the alternative mining law should also pave the way for the creation of a “minerals management council” that would ensure the Philippine Government’s interests are protected.

“In its present form the so-called revenue regimes of the Mining Act reveals that with its many fiscal incentives and tax holidays, it is a one-way assurance for mining companies get their profits while the Government and the Filipino people bear the brunt of the social and environmental risks,” the groups said.

(4) Miners want to answer mining foes in SC
Philippine Daily Inquirer, June 25, 2013

… In its 38-page comment in intervention, the Chamber of Mines asked for the dismissal of the petitions for certiorari and prohibition filed by Hontiveros and her copetitioners, citing three reasons.

These were: That the arguments raised by petitioners had already been passed upon and disposed of against petitioners in the case La Bugal-B’laan Tribal Association v Ramos, which the Supreme Court made a landmark ruling; that the high court should stand by its ruling here; and that the legislative and executive branches should decide on the question of what is an equitable revenue sharing from mining.

The chamber also said the petitioners had not shown any compelling reason to abandon the La Bugal B’laan case as it described their arguments to be a “mere rehash of those already overruled” in the same case.

It also held that there was no actual case or controversy in which to relitigate the case and that petitioners did not complain that they had been injured because of these provisions.

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