People’s survival undermined by bailouts of mining firms, says tax justice advocates
“Bail out common people, not mining companies!” Speakers from Indonesia, Philippines, India and Mongolia shared urgent needs for public funds to address peoples’ survival needs in COVID times and contrasted these with massive revenues raked in by big mining, on top of wide-ranging tax incentives enjoyed by the extractives sector.
“Bail out common people, not mining companies!”
The message was brought home last Aug. 12, 2020 in a webinar that addressed the question: “Should we bailout mining companies?”
Speakers from Indonesia, Philippines, India and Mongolia shared urgent needs for public funds to address peoples’ survival needs in COVID times and contrasted these with massive revenues raked in by big mining, on top of wide-ranging tax incentives enjoyed by the extractives sector.
Tax and Fiscal Justice Asia (TAFJA) Co-Coordinators, Perkumpulan Prakarsa and Asian Peoples’ Movement on Debt and Development (APMDD), pointed out the gross inequality in prioritizing mining corporates in COVID responses. Prakarsa executive director Ah Maftuchan said that transnational companies (TNCs) in extractives have been aggressively lobbying governments for bail outs while earning billions. TNCs are appropriating financial resources needed for peoples’ survival in the COVID crisis. For her part, Lidy Nacpil, APMDD coordinator, underscored that “some sectors need to be completely phased out through a swift and just transition,” and identified mining in coal and fossil fuels as the most destructive for its impact on global warming.
Showing some regional and global trends, Mae Buenaventura of APMDD stated that while unemployment, poverty, and government debt have dramatically risen under the pandemic, companies engaged in the extractive sector have reaped profits because the prices of several commodities, including gold and other mining products, have risen dramatically during the same period.
She cited the additional US$249.5 billion in market capitalization, in the first half of 2020 for the world’s top 50 companies, bringing their combined market value to $957 billion as of end-June due to surging share prices of gold, silver, iron ore and copper.
Maryati Abdullah, executive director of Publish What You Pay (PWYP) Indonesia related the Indonesian government’s decision to dissolve its Extractive Industries Transparency team as part of efforts to reduce bureaucracy during the pandemic. Formed in 2010, it was mandated to determine and control extractive industry transparency mechanism (oil, gas, and mining sector) to follow international standard EITI (Extractive Industries Transparency Initiative).
She said the move is unfortunate given that “the EITI has been proven to increase company compliance in paying royalty and taxes.” According to Maryati, illicit financial flows of the Indonesian mining sector already amounted to IDR23.8 trillion in 2014. Illicit financial flows contribute significantly to revenue loss and are aided by a lack of transparency and accountability. “Mining corporations contributed to COVID vulnerabilities of mining communities. Mining TNCs do not deserve state support,” stressed Sukhgerel Dugersuren of Oyu Tolgoi Watch (Mongolia).
The Oyu Tolgoi copper and gold mine in the Southern Gobi region of Mongolia is operated by Rio Tinto, which controls it through an ownership structure consisting of multiple subsidiaries in tax havens. An Oyu Tolgoi Watch study found how Rio Tinto managed to pressure the Mongolian Government into signing deals that preserve a tax dodging scheme that has allowed it to persistently avoid substantial tax payments to Canada and Mongolia. Rio Tinto’s tax avoidance involved the Netherlands and Luxembourg, two of the world’s foremost tax havens.
Zeena Manglinong of the Freedom from Debt Coalition in the Philippines noted the irony of how the COVID-19 lockdown slowed down the agriculture industry while mining was allowed to operate non-stop. She said peoples’ interests were not the main consideration of economic stimulus measures currently being proposed by government.
Rahul Basu, research director of Goa Foundation, India, urged for a paradigm shift that will ensure that future generations inherit mineral resources that are being squandered today. He said resource-rich countries badly mismanage their natural resource endowments as they are seeking “windfall revenues” rather than ensuring “shared inheritance.” He argued for the protection of “intergenerational wealth,” specifically, advocating for treating non-renewable natural resources as a finite shared inheritance asset, and extraction as the sale of the inherited wealth.
Summing up the webinar and sharing his own reflections, the executive coordinator of the Global Alliance for Tax Justice (GATJ), DerejeAlemayehu, noted that as the benefit derived by resource-rich developing countries is far lower than potential, their resource abundance has so far been largely associated with a “resource curse” than with a resource-driven wealth and development. He thus highlighted that, “A campaign for tax justice in the extractive sector should be about minimizing the environmental and social costs and maximizing the benefits for the people. It should also link with the existing struggles of other economic and social justice movements.” TAFJA is the Asia regional member of GATJ.
Sreedhar Ramamurthi of Environics Trust (India) moderated the webinar.
The online event was an initiative of the members of the TAFJA Tax Justice and Extractives Working Group – APMDD, Prakarsa, PWYP Indonesia, Environics Trust and Mineral Rights Inheritors (India).