By Hannah Torregoza
The bill seeking to exempt small-scale miners from paying income and excise taxes when they sell their gold to the Bangko Sentral ng Pilipinas (BSP) has hurdled second reading at the Senate.
Sen. Juan Edgardo “Sonny” Angara, author and sponsor of Senate Bill No. 2127, also known as “An Act to Strengthen the Country’s Gross Internal Reserves (GIR),” welcomed the development as this would help raise the country’s GIR which has dropped to a seven-year low at $74.8-billion as of end of October 2018.
The bill particularly seeks to amend a requirement from the Bureau of Internal Revenue (BIR) which imposed five percent withholding taxes and two percent excise taxes on the sale of gold to the BSP.
Citing studies, Angara noted that between the years 2005 and 2010, BSP purchased close to 1,000,000 troy ounces of gold or 2,362 gold bars produced from small-scale mining activities.
He said BSP’s gold purchases drastically declined to 35,000 troy ounces in 2012 after BIR imposed the tax requirement in 2011 and further slid to 14,700 troy ounces of gold in 2017.
The senator said the bill aims to help small-scale miners, who prefer to sell their gold to the BSP, and ensures that they would be able to receive a fair price for their gold, instead of selling the gold to the black market where prices are below market levels.
“The measure enables the BSP to better build up the country’s GIR by buying domestically-produced gold from small-scale miners using pesos,” said Angara, chair of the Senate committee on ways and means.
At the same time, Angara called on lawmakers to look beyond the revenues collected from gold transactions which amounted to a low P30-million in 2018 compared to the benefits that would be enjoyed by the country with an increased GIR.
“It would be far more prudent if we work towards deepening our international reserves, instead of focusing on collecting rather shallow revenues from gold sales,” Angara said.
“The first undoubtedly overshadows the latter—considering social impact of returning to the formal sector the sale of gold from small-scale mining,” he stressed.
Once passed into law, Angara said he is confident that an increased levels of GIR eventually translate to higher credit ratings and lower borrowing costs for both the national government and the private sector.