MANILA (UPDATE) - A new law imposing higher royalties on Philippine mines is unlikely to be passed before congressional polls in May 2013, the speaker of the lower house said on Tuesday, further delaying new investment in a sector that once made up a fifth of the country's exports.
Manila has said it will not issue permits for new mining projects until Congress approves the mining tax reform aimed at raising the Southeast Asian country's mine revenue.
"It's difficult because right now we're focused on the (2013) budget and other laws. This Congress is fast drawing to a close," Feliciano Belmonte, House speaker and an ally of President Benigno Aquino, told reporters on the sidelines of a mining conference when asked about the pending tax reform.
Congress has only two months of work left before the new year due to holidays. Belmonte said lawmakers are likely to be focused on the election campaign by February, which means the mining tax reform would have to be taken up by the next Congress which starts in July.
At present, the government gets a royalty of only 5 percent of gross revenue collected from 11 of 35 mines operating within so-called mineral reservations sites across the Philippine archipelago.
The International Monetary Fund has recommended Manila scrap all mining incentives, including a 5-year tax holiday, and merge its 2 percent excise tax and 5 percent royalty into one 7 percent royalty to be imposed on all projects.
In 2010, Manila's excise tax revenue was just less than 1 percent of the mining sector's gross output, valued at 145.3 billion pesos ($3.5 billion). It also collected about 12 billion pesos in other taxes and fees, or 8 percent of total production.
The Philippines is said to have the world's fifth largest reserves of gold, copper, iron, chromite, manganese, silver, platinum, zinc, and nickel, with a total value of $850 billion based on latest government estimates.