LGUs getting P5.6B as 40% cut of gov’t mining tax income

Provinces, cities, municipalities, and barangays that host mining operations are getting an extra P5.6 billion in fresh development funding this year from the national government, Surigao del Sur Rep. Johnny Pimentel said on Sunday.

“The amount represents the 40 percent share of local government units (LGUs) in the gross earnings derived by the National Treasury from mining activities,” Pimentel, a member of the House ways and means committee, said.

The P5.6 billion is provided for in the 2022 National Expenditure Program and is on top of the internal revenue allotment (IRA) share of the host LGUs, according to Pimentel, whose home province hosts nickel mining operations.

“We expect the national government as well as host LGUs to generate more income from mining activities in the years ahead, in light of the lifting of the ban on the issuance of new mining permits,” Pimentel said.

In April last year, President Rodrigo Duterte issued an executive order revoking the nine-year freeze on the grant of new mineral production sharing agreements (MPSAs), in a bid to boost government income, stimulate employment, and the accelerate the country’s economy recovery from the pandemic.

The suspension was imposed by then President Benigno Aquino in 2012, also via an executive order.

Under the Local Government Code of 1991, LGUs are entitled to 40 percent of the gross earnings from “mining taxes, royalties from mineral reservations, forestry charges, and fees and revenues collected from energy resources” in their areas.

Pimentel said the 40 percent cut of host LGUs amounted to P6.2 billion in 2021; P5.6 billion in 2020; P3.2 billion in 2019; and P4 billion in 2018.

Under the law, the LGU share shall be distributed as follows: 20 percent to the host province; 45 percent to the host component city or the host municipality; and 35 percent to the host barangay.

In cases wherein the host is a highly urbanized or independent component city, 65 percent shall go to the city and 35 percent to the barangay.

Under the law, once the LGUs receive their shares, they must appropriate the funds to finance local development and livelihood projects.

However, in the case of LGUs that obtain their shares from the extraction of hydrothermal, geothermal and other energy assets, they must spend at least 80 percent of the money solely to reduce the cost of electricity in the areas that supplied the resources.