Mining and Fiscal Reform (Competitive and Equitable) Julian Payne President, Canadian Chamber of Commerce I come from

m a country where mining is one of the major components of our economy. Weve gone through bad times and good times. Its probably one of the main contributors of Canadas long term and sustained economic growth. The position of the JFC on mining is quite straightforward: we support the implementation of the existing Mining Act. We think this is an excellent Act, very progressive. The problem is proper implementation. The second part of it, we support the implementation of this Act with an elated competitive fiscal regime. Now, I would like to draw to you attention the fact that theres been a lot of talk about two per cent to five per cent government takes from the Mining Act. That is like me saying you only pay a twelve per cent VAT tax and thats all the tax you pay to the government, forgetting you pay income tax, forgetting you pay other tax, property taxes. The fact is that in the Philippines today, the government, when you add up all the items it takes from the mining industry, takes about sixty per cent of the revenues of the life of the mine. A more serious fact is that this is not competitive with other major mining countries. I dont know if any of you saw this, I presume that you did, this chart summarizes the IMF study of the competitive position of the Philippines in mining and it shows that theres a couple of countries which take a bigger share, Zambia and Mongolia, the Philippines takes about sixty per cent under the current regime and most other progressive economies which have a major mining industry like Canada, like the US, like Chile have about 40 to f50%. The position of the JFC is that we support implementation of the current mining legislation with a competitive fiscal regime. That means, any legislation that submitted to the Congress should take into account not just one portion of the tax structure but the whole take of the government from the mining industry. The key point is the whole take should be competitive, competitive means less than the present amount. I would urge you all, the journalists, to look very carefully not just on a specific tax take of a specific tax, but also to look at the total tax take that the government takes from the mining industry. The mining industry, in conclusion, is one of the major potential sectors of growth in the Philippines along with agriculture, manufacturing, and tourism and of course, the service industry. If it is properly regulated, the sound, stable and sustained policies, you have the potential to economic growth by an additional two per cent. That is the general assessment by economists but that requires a competitive fiscal framework. You may go by two per cent but if you dont have a competitive framework, you will not get

the foreign investment and therefore, you will not get the additional revenue even though youve increased the rate.