CAMPAIGN on TAX JUSTICE and EXTRACTIVES INDUSTRY
21-25 Nov: Join the Global Days of Action for Tax Justice in the Extractives 2022
The Global Alliance for Tax Justice (GATJ) and its regional networks Tax and Fiscal Justice Asia (TAFJA), Tax Justice Network Africa (TJNA), and Red de Justicia Fiscal de América Latina y Caribe (RJFALC) will host the Global Days of Action for Tax Justice in the Extractive Industry from 21 to 25 November, 2022. The 4th edition of the campaign builds on the demands that the GATJ members have been pushing for since 2019, and calls more specifically for excess profits taxes on oil, mining and gas companies.
The continuing impacts of the global pandemic and the climate crisis have spawned a glaring gap between a tiny set of winners and the majority of the world’s population. In 2022, net profits of the 40 largest mining corporations grew by 127% from the previous year, surpassing their pre-pandemic revenues by more than double. However, few people benefited from the boom: research shows that there was a 130% rise in dividend payments and rewards for top executives, whereas many lost their homes, incomes and livelihoods.
Reports by the International Consortium of Investigative Journalists (ICIJ) expose that mining corporations systematically shift profits and wealth through corporate manoeuvring and shell companies registered in low-tax jurisdictions. On top of these illicit financial flows, they reveal the extent of regulatory capture by mining interests, involving patronage and corruption in processes of securing mining licences.
Social movements, particularly in climate, labour and gender justice, have been raising proposals for the extractive sector to operate responsibly with communities and the environment. Building connections with these demands, this campaign brings the perspectives of tax justice and the broader economic justice movement, calling for a rights-based economy that puts people and the planet at the centre of discussions and decision-making.
“The global crises make closing tax loopholes and raising more public revenues more urgent and imperative. However, the extractive sector continues to be given free rein to extract resources and profits with neither limits nor regard for social and economic costs or for irreversible environmental impacts,” said Dereje Alemayehu, Executive Coordinator of GATJ. “In addition to the profit shifting and illicit financial flows rampant in this sector, facilitated by the broken global tax governance and lack of regulatory and transparency mechanisms, the extra profits being generated by those benefiting from the crises remains untaxed. It is high time to take urgent and rigorous measures in the extractives sector to raise more revenue: stopping the perverse flow of resources from low-income to rich-OECD countries; scrapping tax giveaways, curbing loopholes and tax abuse, as well as immediately introducing tax on extra profits. An inclusive and equitable recovery will only be possible through tax justice.”
Global tax justice calls
The global tax justice movement calls on governments and multilateral institutions to:
Stop illicit financial flows and tax abuses in the extractives sector;
Tax the superprofits of extractives corporations by instituting windfall profit taxes;
Curb tax incentives granted to the extractives industry;
Make extractives companies pay their share in taxes and immediate costs of rehabilitation and rebuilding;
Use taxes for peoples' needs, especially for the needs of communities affected by social and environmental damage; and
Protect and uphold the rights of workers and women affected by mining, including their rights to defend their communities.
18 NOV | 11 am Pretoria
Online event: Resource Backed Loans and Collateralization of Mineral Resources
Organisers: Afrodad and Tax Justice Network Africa
The webinar seeks to pinpoint Africa’s over reliance on mineral resources as the primary commodity export. This overdependence on mineral resources could be a result of IMF’s fiscal consolidation country advice on debt management and how resource-rich countries that are in debt distress are forced to resort to RBLs as a way of financing their debt. Through this online discussion, we seek to analyse whether resource backed loans and collateralisation of mineral resources are a sustainable financing option for African countries and showcase how the current multilateral and international financial system contributes to a vicious cycle of dependence on RBLs.
21 NOV | 2 pm Central European time
Launch event: Tax extractives excess profits NOW!
Organisers: Global Alliance for Tax Justice, Tax and Fiscal Justice Asia, Tax Justice Network Africa, Red de Justicia Fiscal de América Latina y el Caribe
The Global Alliance for Tax Justice (GATJ) and its regional networks kick off the Global Days of Action for Tax Justice in the Extractive Industry 2022 with an online round table, in which panellists from Asia, Africa, Latin America, Europe and North America will discuss the main issues each region has been facing with the extractives, as well as what could be achieved through tax justice and, more specifically, excess profits taxes in the sector.
CIVIL SOCIETY ORGANIZATIONS DECRY "FALSE PROMISES" OF DOF FOR TRANSPARENCY IN THE EXTRACTIVES SECTOR
Groups to press for government monitoring of mining companies
Leaders of mining affected communities and civil society groups decried Friday a government official’s statement that the Philippines can ensure transparency in the extractives sector following the country’s withdrawal from the Extractive Industries Transparency Initiative (EITI), a platform for monitoring mining companies’ performance.
In a meeting to discuss strategies to press for transparency and accountability in the extractives sector the civil society organization (CSO) leaders said the government should halt its “subservience to corporate interests in the mining industry.”
Finance Secretary Carlos Dominguez had earlier downplayed the withdrawal saying that the Philippine government will “continue to champion better resource and revenue management” in place of the global multi-stakeholder mechanisms of the EITI.
However, CSO leaders were doubtful of the Philippine government’s commitment to champion peoples’ interests vis-a-vis the mining industry, citing the abundant privileges and incentives granted by the government to the sector despite its long history of questionable practices, including environmental degradation, tax and labor abuses.
“It is appalling that the Philippine government refuses to be transparent in policies and in its involvement in the extractive sector, ,” said Lidy Nacpil, Coordinator of the Asian Peoples’ Movement on Debt and Development (APMDD. “The extractive industries have proven to be harmful and destructive to the environment and have significantly contributed to the climate crisis.”
Nacpil also said the sector is “a hotbed of illicit financial flows that result in foregone revenues and drain our economies of financial and other resources that should have instead been used for peoples’ needs.”
The Philippine government should prioritize peoples’ needs in the face of multiple crises and put an end to tax and human rights abuses of corporations in the extractives sector, she said.
Dr. Benito Molino, Chairperson of Zambales Lingap Kalikasan (ZALIKA) denounced the latest move of the Department of Finance (DOF) to abscond a platform involving government, mining corporations, and civil society that requires its members to publish financial information according to a standard.
“Withdrawing from the EITI only further shows that this government is a willing puppet of extractive industries, especially mining,” Dr. Molino said. “As the Philippine government plays the role of eager servant to mining corporations, we foresee intensified extraction of natural resources and continuing impunity for corporations’ tax, labor, and other abuses. This will aggravate the destruction of areas for food production and will worsen our current food and environmental crises.”
Dr. Molino is a veteran of a long battle mounted by communities in Sta. Cruz Zambales, calling on the Philippine government to sanction mining corporations for the irreversible degradation of agricultural lands and fisheries in the area.
In 2017, four of these mining corporations were ordered to close as a result of the government's investigation of their violations of environmental laws. However, these orders were overturned in 2019.
The companies investigated by the Department of Environment and Natural Resources were BenguetCorp Nickel Mines Inc., Zambales Diversified Metals Corporation, LNL Archipelago Minerals Incorporated, Eramen Minerals Inc.
More recently, the lifting of Executive Order 79 imposing a moratorium on the approval of new licenses for mining corporations “guaranteed a new lease on life for mining corporations in Zambales,” Dr Molino said.
Dominguez’s pronouncement to champion transparency in the extractives sector offers nothing more than “false promises,” according to Fara Diva Gamalo, Coordinator of women’s organization Oriang in Eastern Visayas. “Public officials like Dominguez who have vested interests in protecting profits of mining corporations hold no moral high ground to institute policies strengthening accountability in the extractives sector,” Gamalo stated.
“For as long as the DOF is hostage to corporate interests in the extractives sector, the demands of local communities to exact accountability from mining corporations will remain unheeded,” Gamalo said.
At the forefront of the anti-mining struggles in Eastern Visayas, Gamalo has stood witness to the widespread impunity in human rights violations committed against leaders of local communities who demand simply for the government to protect their homes and livelihoods by prohibiting the destructive operation of mining corporations.
Meanwhile, in a message sent to Philippine-based CSOs, Financial Transparency Coalition (FTC) Executive Director Matti Kohonen said the Philippine government’s recent withdrawal from the EITI is “a serious step back for transparency in the extractive sector, including financial transparency on ownership and taxes paid in the sector.”
The FTC is a global network of organizations working to help curb illicit financial flows with members in Europe, Africa, Latin America and the Caribbean, Asia, and North America.
Kohonen emphasized the need to maintain public registries of beneficial owners in extractive companies, and to regularly update and expand it to include fisheries and forestry.
A public beneficial ownership (BO) registry provides access to information on companies’ beneficial owners, the individuals who ultimately own, control or benefit from the companies’ profits. CSO leaders said that such registries can be important tools in fighting tax abuse and corruption and can aid in recovering foregone revenues from profits of mining corporations stored in offshore accounts.
The CSO leaders cited the 2021 State of Tax Justice Report saying untaxed wealth is but a fraction of the PhP 26 trillion lost to tax abuses globally of wealthy individuals and corporations. Aggressive and systematic tax avoidance practiced by extractive companies through transfer pricing and trade misinvoicing result in massive tax losses for the Philippines, they pointed out.
They said government inaction to address these issues prompted the tax justice movement to mount protests at the DOF in November last year, demanding public investigations into the tax and labor abuses of mining corporations exposed in the Pandora Papers. The prevalence of profit-shifting and tax avoidance in the extractives sector, whose profits prosper amidst financial secrecy, also points to the weakness of global standards of financial transparency and lack of public access to beneficial ownership information.
The longstanding demands by civil society for transparency and accountability are foregrounded by a history of unjust practices, including tax abuses and massive illicit financial flows (IFFs) in the Philippine extractives sector. These IFFs are jointly enabled by a domestic fiscal regime that encourages tax avoidance through decades-long tax incentives to mining corporations and a global tax architecture that continues to permit profit-shifting to low-tax jurisdictions. The Pandora Papers expose in 2021 implicated political and business elites across the world, including Philippines, in shady but systematic practices to hide wealth in offshore accounts to avoid paying taxes.
“It is imperative to transform global and domestic tax rules, to effectively curb IFFs and end the privileged status enjoyed by mining companies because of the generous tax and other fiscal incentives granted by many governments in Asia, including the Philippines,” Nacpil said. “Tax abuses by corporations and wealthy individuals and other types of IFFs significantly drain tax revenues and public resources urgently needed to fund public services.”
APMDD holds forum on “Women’s Voices for Tax Justice: Women, Mining and Climate”
As part of the Global Days of Action for Tax Justice for Women’s Rights, APMDD and TAFJA held an online forum on 24 March 2022 to listen to women’s voices for tax justice and explore how mining and illicit financial flows impact on women’s rights and resilience in the face of an alarming climate crisis.
APMDD coordinator, Lidy Nacpil, called mining, climate, and illicit financial flows a ”triple whammy on women”. She said most of the countries of the South have extractivist economies as a legacy of the colonial past.
“The continuous extraction affects local communities where mines operate with pollution and extraction of resources during the course of mining… But certain types of extraction affect even far away communities. That is in the impact on climate, especially the continues extraction, production and consumption of fossil fuels which is responsible for 75 percent of global greenhouse emissions that has triggered and is escalating global warming and climate change.”
She emphasized that fighting for tax justice in extractives is not an easy fix. “Extraction has to be done in ways that economies will benefit but the environment is not destroyed. We need to stop the current tax incentives given to mining companies which encourage them. We need to punish, penalize, drive away these foreign mining companies, who do not only abuse countries’ environments, but their own workers,” she said.
“The climate crisis tells us we cannot take too long to take action. Policy changes are urgent. We need to work hard and fast,” Nacpil said, stressing the importance of women “who won’t stop at nothing to protect their children” in the fight.
Hoang Phuong Thao of Action Aid Vietnam noted the need to “unpack the reality of how inequality has increased significantly through the multiple crises that we have gone though in the past few years, and especially the crises of climate change and COVID -- and the reality that governments are trading off citizen’s rights for the benefit and profit of corporates."
“In the race to the bottom, ASEAN countries are trying to reduce corporate income tax to attract investments, with the hope that the trickle-down effect will turn into employment. But in fact our people -- especially our women, our women workers -- are suffering from loss of lands and livelihoods because of waters rising, suffering being pushed out of the labor market, becoming informal workers, becoming workers that have no protection,” she said.
Perspectives of women in mining-affected communities and gendered impacts of extractivist activities were discussed by Fara Diva Gamalo of the Freedom from Debt Coalition-Philippines and Srishty Anand of Oxfam-India. Gamolo spoke of a community in Leyte province where hundreds of rice fields have been destroyed by Chinese mining company, extracting black sand and shipping it out to China, since 2010. “Not only livelihoods have been destroyed, but also fresh water sources are depleting because of the mining,” she said.
Illicit financial flows in the extractives sector and impacts on women was discussed by Meliana Lumbantorua, a program manager of Published What You Pay Indonesia. “For Indonesia, tax is a dominant revenue source, but mining corporations have been using loopholes in tax laws for tax avoidance,” she said.
“The current crises have been especially hard on women. We have to push those ‘status quo-ists’, the financial profiteers and profit shifters, those who listen only to the rich, and those fossilized defenders of fossil fuels, to move towards cleaner, greener, more sustainable alternatives and system change,” said Vidya Dinker of the India Social Action Forum.
“We honor women who continue to lead the fight against mining and many fights for tax and gender justice, for climate justice. Women who, despite being marginalised from decision making in all spheres of life, including on financial matters, demand transparency, accountability and inclusiveness in financial systems, and are also in the frontlines of crafting transformative economic visions beyond extractivist economies,” Jeannie Manipon, APMDD Development Finance program manager, said at the conclusion of the forum.
See video of the forum here
MANILA, 26 November 2021- Tax justice and human rights activists today trooped to the Department of Finance to protest the undue tax privileges given to and the tax abuses of mining corporations.
“Are you truly Santa?” they sang to the tune of “Santa Clause is Coming to Town,” in reference to the privileges given by government to mining corporations on the pretext that mining contributes significantly to the economy and the communities where they operate. In April, the Duterte government lifted a 9-year ban on issuing new mining licenses and rationalized incentives to the extractive industry.
Luke Espiritu, president of the Bukluran ng Manggagawang Pilipino (BMP), said the Department of Finance (DOF) should be working toward progressive taxation and stop championing elite and corporate interests.
“While the world is still coming to terms with the effects of the coronavirus pandemic and the urgent challenge of economic recovery, it has been “business as usual” for the extractive industry’ and some of its shady operations. Mining corporations are raking in huge profits even under COVID-19 restrictions on most other economic activities,” he said.
BMP was among groups who held a rally in front of the Bureau of Internal Revenue against tax abuses of mining corporations on November 19. They put the spotlight on a corporation wholly owned by APEX Mining, one the most profitable companies in the Philippines, that has been exposed for profit shifting in the Pandora Papers, the large-scale investigation conducted and published by the International Consortium of Investigative Journalists through a team of journalists from 150 news outlets in 117 countries. The Pandora Papers mentioned several prominent Filipino names and families.
“Workers are squeezed dry, work in very bad conditions for very minimum wages, but the government only watches out for business. Government only provides corporations with even more relief from paying direct taxes. This effectively reduces potential revenues for public coffers – precious resources needed especially at this time of pandemic and economic crisis,” Espiritu said.
“Baliw. (Mad.) This government is mad in charging mining corporations very low taxes and giving them free rein with our gold, nickel, and copper,” Espiritu said. He lamented that mining corporations are even allowed by government to form their own private armies.
Sanlakas secretary general Atty. Aaron Pedrosa noted that the extractive sector is booming, For the first half of 2021 alone Nickel Asia earned ₱2.73 billion, a 579% jump from the same period last year; Atlas Mining gained a net income of ₱1.9 billion; and, Semirara Mining almost tripled its net income to ₱6.28 billion from ₱2.2 billion last year.
“Mining is touted to be a driver of our economic recovery but far from it, we are only seeing its recovery as mining companies rake in super profits,” he said, adding that the government is complicit in fueling the setup as “it is overly generous to business, providing guarantees, fiscal and non-fiscal incentives for decades."
Incentives include, under FTAA (Financial or Technical Assistance Agreement), incentive for Income Tax-Carry Forward of Losses; incentive for Income Tax-Accelerated Depreciation; Amortization of Exploration and Development Expenses; and, Incentives for Expansions and Modifications to Existing Facilities and for Development of New Mineral Resources.
He added that the DOF has engineered a series of tax reforms under the guise of ‘rationalizing corporate tax incentives’ that escalates the reduction of corporate income tax rates. “This follows the global trend of ‘racing to the bottom’ of minimum corporate tax rates to provide the most profitable business environment for corporations. By DOF’s own admittance, for the first time in Philippines’ recent history, it has promoted a revenue-eroding tax reform in the CREATE law,” he said.
Flora Santos, president of Oriang, castigated Dominguez’s recent statement rejecting the legislative proposal for a wealth tax. “Our people are going hungry, but this government continues to rely on regressive taxation. For poor people, this means high prices for some of their most basic necessities. We pay VAT for almost everything we consume but get no services from this government, not even for the most essential needs for health care and housing.”
Meanwhile, Lidy Nacpil, coordinator of the Asian People’s Movement on Debt and Development (APMDD), expounded on the Global Days of Action on Tax Justice in the Extractive Industry in a virtual press briefing that followed the rally. “This is part of the effort globally led by many groups and movements to expose the abuses of multinational companies, particularly mining companies, and counting among the abuses is not just abuse of labor, abuse of the environment, but also abuse of taxes,” explained Lidy Nacpil, coordinator of APMDD.
“We know that mining companies are earning trillions of dollars worldwide and most mining companies are multinationals operating in many countries. One of the ways that they ensure huge profits is to avoid and evade taxes and to court governments to provide tax incentives for them based on a myth on the benefits of their operations. It is a myth because it has been proven that mining does not really add to the real economic benefit for people and communities in our countries,” she added.
The Global Alliance for Tax Justice (GATJ) called for Global Days of Action for Tax Justice in the Extractive Industry on 25-26 November noting that “While the world grapples with the continuing impacts of the pandemic and the urgent challenge of economic rebuilding, it is ‘business as usual’ for the extractive industry. Considered an essential service in many parts of the world, its operations have been exempt from lockdown and other restrictions. It continues to benefit from tax incentives regimes, accumulating wealth and profit for conglomerates and elite countries where they are registered. From the Swiss leaks to the Paradise Papers, and the most recent expose, the Pandora Papers, the extractive industry has been linked to the layers of financial secrecy that produce illicit financial flows and the web of tax havens that enable massive profit shifting and systematic tax avoidance.”
The extraction of natural resources in many countries in Asia has long served as a foundation for the concentration of wealth and power in the hands of a few -- at the expense of communities, marginalized sectors, and the environment. Our shared experiences of large-scale mineral extraction under colonial occupation and the neoliberal drive of governments to attract foreign investments in extractives are deeply intertwined with a long history of peoples’ struggles for lands, livelihoods, and human rights in mining-affected communities across the region. These are also part of a continuing history of labor exploitation and sustained and systematic transfers of wealth, natural resources, indigenous knowledge, and other assets from the Global South to the Global North. A situation that has produced immense, profoundly immeasurable social and ecological debts owed to the peoples of the Global South.
Multinational corporations in the extractive industry and their shareholders from local elites have enjoyed long standing guarantees of profit accumulation from ownership and control of vast mineral, oil and gas reserves, boosted by generous fiscal and non-fiscal incentives. Where the collusion of corporate and elite interests dominate politics and policymaking, the capacities and political will of governments to fulfill their human rights obligations, climate commitments, and sustainable development goals are severely undermined and eroded.
The multiple crises of health, economic recession and climate emergency present us with the urgent challenge and unique opportunity to chart a different path and reject economic policies and development paradigms that harm people and the planet. It is thus alarming when governments and international actors look uncritically at the extractive industry as part of the ‘solution’ to economic development challenges without regard for its links to illicit financial flows, human rights abuses and the climate crisis. Environmental abuses and other unjust practices of the extractive industry must be stopped; the flaws and loopholes in national and international tax systems that enable mining, oil and gas companies to shift profits, practice systematic tax avoidance, and enjoy generous tax incentives, must be corrected.
On November 26, 2021, the Asian Peoples’ Movement on Debt and Development (APMDD) joins advocates and allies on the Global Day of Action on Tax and Extractives to demand accountability for human rights and environmental abuses, to advance tax justice by transforming mining fiscal regimes, and to call on governments to make taxes work for people and the planet.
The multiple crises experienced by mining-affected communities amidst the global pandemic exposed the continuing crimes of mining corporations against peoples of Asia. In India, hazardous working conditions and underpayment of wages are persistently reported by workers in coal mines, whose toxic fumes were also proven to weaken respiratory health and increase vulnerability to COVID-19 of surrounding communities. In Indonesia, the government introduced several reforms to the Mining Law that granted automatic permit extensions and expanded the scope of tax incentives enjoyed by the mining sector despite reports on the heightened vulnerability of over a hundred mining-affected communities to natural disasters. In the Philippines, the government lifted the nine-year restriction on mining licenses, thus allowing the continuation of human rights and environmental destruction without consequence.
These incidents illustrate a very bleak picture of mining’s impacts on communities in Asia. Women in mining-affected communities are likewise facing additional threats to their livelihood and obstacles in accessing necessities such as water and food due to displacement of communities and degradation of natural resources. Mining corporations and state forces have also taken advantage of lockdown restrictions to violently bear down on the resistance of indigenous tribes and other marginalized sectors, deepening the accumulation by dispossession of lands and suppression of their rights to defend their communities from encroachment. Despite the risks and impacts faced by workers, women, and indigenous peoples, profits gained by mining corporations have skyrocketed in 2021 to higher than pre-pandemic levels.
Amidst widespread exploitation and abuses on human rights and the environment, governments have reinforced the regulatory stranglehold of the mining industry through tax and fiscal regimes that grant a range of incentives, treaties, and agreements exclusively offered to mining corporations, usually lasting more than a decade. Embedded in fundamental Mining and Investment codes of many Asian countries are several loopholes for mining companies to pay meager revenues far below baseline corporate tax rates. Massive discrepancies between profits generated by the mining industry and their paltry tax contributions reveal the magnitude of foregone revenues. This staggering revenue loss sharply undermines domestic resource mobilization in countries that direly need to rebuild essential public services that have been crippled by decades of privatization and urgency of pandemic-related social demands.
On top of fiscal incentives and legalized instruments enabling tax avoidance, mining corporations deliberately take advantage of several gaps in the broken global tax architecture, financial secrecy through tax havens, and corporate restructuring to engage in aggressive tax planning and reduce tax obligations to national governments. Legislative lobby groups of mining corporations actively plan around tax competition in Asia and globally, especially in levies specific to the mining sector such as royalties, processing and export taxes. These underline the importance of the voices and demands of resource-rich developing countriesin pushing for an inclusive, democratic, and transparent intergovernmental body on global tax rules under the auspices of the United Nations.
Our demands for accountability from mining corporations and governments to address peoples’ urgent needs are nevertheless rooted in the recognition that reforms in tax regimes and stricter regulations on labor and human rights are still fundamentally inadequate to address the destructive intergenerational impacts of large-scale mining on the environment and local communities. Threats to biodiversity and livelihoods, displacement, and climate impacts will continue to encroach upon peoples’ welfare and further threaten the planet’s future as long as economies remain heavily reliant on natural resource extraction for production and commodity exports. Because of these impacts inherent in the continuation of large-scale mining activities, governments in Asia must profoundly rethink industrial policies that regard extractivism as a pillar of development. We must progressively shift away from economic systems that prioritize profits of mining corporations and embedded interests of political elites over the urgent demands of mining-affected communities, workers, women, and other mining-affected sectors, and the people’s demands for just, sustainable, equitable and democratic economies.
We demand governments in Asia to:
1. Tax the Rich, not the Poor!Address the biases of tax systems that favor elite interests and impose unjust tax burdens on the people. Stop corporate tax abuses and all forms of illicit financial flows! Strengthen and enforce financial transparency mechanisms. Work for a truly inclusive, democratic, transparent and accountable intergovernmental mechanism for governance on international tax matters under the auspices of the United Nations.
2. Advance tax justice in the extractive industry!Make mining companies and MNCs pay their fair share of taxes. Probe and sanction tax abuses of mining corporations.
3. Stop the exploitation and abuse of workers in the mining and extractives industry. Uphold the rights and promote the welfare of all marginalized sectors and communities affected by the mining industry.
4. Stop environmental destruction and other abuses of mining companies!Make mining companies pay for reparations and ecological restoration.
5. Put an end to economic dependence on natural resource extraction by working towards system change and transforming our deeply extractivist economies towards a peoples’ vision of sustainable, just, equitable and democratic economies that prioritize people and planet over corporate greed and profit-driven elite interests.
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