CAMPAIGN on TAX JUSTICE and EXTRACTIVES INDUSTRY
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.
Normal 0 false false false EN-US X-NONE X-NONE
19 November 2021
The mining industry in the Philippines is built upon centuries of plunder and pillage of natural resources, exploitation of labor, environmental degradation and violations of human rights especially of indigenous peoples and other mining-affected communities. As in other extractives sectors, the mining industry across the world has also grown immensely from the accumulation of massive profits through shadowy financial deals and tax avoidance while enjoying generous tax incentives and other privileges from governments. It is of little surprise therefore that the Pandora Papers and other leaks of financial documents have consistently linked local business and political elites with mining connections to offshore accounts and shell companies that enable them to shift profits to tax havens and hide their untaxed wealth.
The massive social costs of these illicit financial flows fall heavily on the shoulders of mining-affected communities whose access to essential public services such as water, electricity, healthcare, and education has been gravely obstructed by the monopolized control of mining corporations over the use of their lands and resources. Unjust practices of tax avoidance by mining corporations revealed in the Pandora Papers thus critically erode tax revenues badly needed to provide for peoples’ urgent needs, especially the poor, women, and other marginalized sectors who are burdened with tax obligations that are systematically avoided in turn by wealthy mining elites.
Despite the meager contribution of mining and dirty energy to national output and employment, the Philippine economy continues to be held hostage by extractivist exploitation and the deep-rooted complicity of national and local political elites in the deregulation of the mining and energy sectors.
During the COVID-19 pandemic where hazards faced by Filipino workers have intensified, the Philippine government has once more exposed its allegiance to business elites who have forced their will and declared the mining sector as an “essential” economic activity, expressly allowing continued operations despite the health and safety risks inherent to the industry. Large-scale mining corporations have also taken advantage of government suppression on mobility and economic activity during the pandemic, violently silencing organizers and environmental defenders in mining-affected communities.
Far from condemnation or investigation of these unjust practices, actions taken by the Duterte administration affirmed that calls for justice and accountability have fallen on deaf ears. Government’s privileging of mining activities is given a new lease on life with Executive Order (EO) 130 that lifts the ban on new mineral agreements granting tax and non-tax incentives for mining corporations, opening several loopholes for mining corporations to cut down on tax payments for at least 25 years.
Violations in ensuring workers’ occupational safety and the urgency of plugging leaks in tax revenues for essential public services alarmingly intersect in the case of Apex Mining Co. Counting billionaires Dennis Uy and Enrique Razon – both parties to key government infrastructure and logistics contracts – among its directors, Apex Mining exclusively operates gold mines in Davao de Oro and Benguet. Not only does the corporation benefit from tax holidays granted under multiple Mineral Product Sharing Agreements (MPSAs), Apex Mining’s extractivist business model is also built upon layers of financial secrecy. Its wholly-owned subsidiary – Monte Oro Resources and Energy Inc. (MORE) – owns two companies officially registered in the British Virgin Islands, a known tax haven where corporations store hidden wealth to avoid tax and legal obligations, in spite of generating profits directly from mining activities in the Philippines, Sierra Leone and Uganda where these undeclared assets are undervalued and undertaxed.
Over 20% of Apex Mining’s workforce was also reported to have contracted COVID-19 in localized outbreaks from October 2020 to January 2021, affecting even the communities surrounding the mines. The Department of Health has raised concerns that the conditions of work in enclosed spaces of mining tunnels and poor ventilation heighten the risks of virus transmission, prompting an investigation on Apex Mining’s occupational safety standards, with results remaining undisclosed thus far.
The case of Apex Mining Co. serves as a glaring emblem of many mining corporations in the Philippines whose profits flourish by depriving workers and the Filipino peoples of basic needs for survival. These unjust practices are at great risk of being brushed under the rug with the Philippine government upholding Apex Mining Co.’s MPSA until the 2030s and granting additional tax holidays and incentives to mining corporations through E.O. 130.
We thus reiterate our calls for justice and accountability for tax and labor abuses by corporations in the extractives sector. We urgently call upon government agencies to actively involve mineworkers and mining-affected communities in an independent probe of labor practices and working conditions in mines and other mining-related operations to ensure that labor, health and safety, human rights, and environmental standards are in place.
As peoples’ organizations in the Philippines and in Asia committed to tax, labor and environmental justice, we present the following calls and demands for tax justice in the extractives industry:
- Stop the plunder and exploitation of labor and natural resources, environmental destruction and other unjust practices by mining companies! Uphold the rights of workers, indigenous peoples, women and other marginalized sectors in mining-affected communities. Mining and other extractive companies that bring harm to communities and the environment and/or have a long or outstanding track record of labor and human rights abuses must be shut down while ensuring just transition for workers and communities that may be affected.
- Stop corporate tax abuses and other illicit financial flows in the extractives industry! Scrap wasteful tax incentives such as those included in the MPSA! Government agencies must also probe into mining corporations’ layers of financial secrecy to recover hidden and untaxed wealth of the elite, and channel these funds to ensure quality public services for all, especially for women, indigenous peoples, and other marginalized sectors in mining-affected communities.
- Advance tax justice in the extractives industry by ensuring a comprehensive and effective tax regime, including through resource or export taxes on the export of raw materials from extractive activities, taxation of services related to extractive industries and progressive environmental taxes. Financial transparency and accountability mechanisms and other anti-abuse measures must be strengthened and applied to prevent corporate tax avoidance and other types of illicit financial flows. Levy progressive and adequate tax rates on mining and extractive activities.
- 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.
Bukluran ng Manggagawang Pilipino
Asian Peoples’ Movement on Debt and Development (APMDD)
APMDD Campaign on Tax Justice in the Extractives Industry
Built on centuries of environmental pillage and wealth extraction in mineral-rich areas, the extractive industry has historically thrived in environments of financial secrecy, corruption, tax abuses and other illicit financial flows (IFFs). Social movements and mining-affected communities have long been waging fierce campaigns directed at the extractive industry, especially in the mines and mineral sector, calling attention to the destruction of livelihoods, unjust labor policies, environmental impacts, among others.
There is an urgent need to stop abusive practices by corporations in the extractive industry such as tax avoidance and leakages in domestic resource mobilization due to tax privileges and other incentives given to the extractives industry. This should be part of a thoroughgoing critique of regressive tax systems that heavily favor corporate and elite interests and enable illicit financial flows. Because of these abusive practices, the extractive industry not only contributes to the destruction of community livelihoods and the environment, and to increased exposure to climate change and its impacts, it is also a major factor in draining economies of the Global South of foregone revenues that could and should be used for funding public services.
APMDD’s campaign for tax justice in the extractives industry is based on the following key assertions:
As part of the shift away from EXTRACTIVISM, which is a key feature of the capitalist system
A major aim of our campaign on tax and extractives is exposing and resisting EXTRACTIVISM – exploitation, plunder, and destruction of natural resources to the huge detriment of people, communities and the planet – which is primarily driven by corporations, especially MNCs, in collusion with local elites, governments, and international financial institutions (IFIs) – in order to fundamentally reorient our economies towards prioritizing people and the planet.
As part of the fight against flaws of the tax system, abusive tax practices, and illicit financial flows that erode public revenues and pave the way for intense profiteering of corporations – especially of MNCs
The campaign is aimed at exposing the flaws of domestic and international tax systems and policies, the tax abuses of corporations - especially MNCs in oil, gas and mineral industries – that result in massive erosion of public revenues and intense profiteering at huge costs to people, communities, workers, the economies, and environment of Asian countries. It aims to achieve political (or other) wins, which shall serve to weaken the ability of corporations for IFFs, for plunder and greater accumulation of profits.
As part of the struggle for the democratization and redistribution of wealth and resources
The campaign for tax and fiscal justice, of which curbing illicit financial flows forms an important part, is in line with the peoples’ struggle for sustainable, democratic access to and control over wealth and natural resources. The campaign also aims at strengthening the voices of local communities, calling on governments to uphold the rights of communities and women affected by mining and other extractivist activities, including their right to defend their communities.
As part of efforts to effect changes in norms and standards, laws, and policies –
- to correct flaws in the tax system that diminish tax revenues from extractives industries and allow/facilitate tax avoidance and abuses by corporations;
- to curb and penalize tax abuses and tax avoidance by corporations and illicit financial flows from the extractive industries;
- to transform regulatory mechanisms over the extractives industry at different levels of governance;
- to build and shape strong public opinion towards seeking tax and fiscal justice for tax abuses in mining and other extractivist activities; and
- to strengthen movements and linkages among movements, build convergences and synergies across campaigns on IFFs, tax incentives, and public spending with human rights, gender justice, climate justice.
Ten Demands for Tax Justice in the Extractives Industry
The campaign advances the following demands:
- Scrap tax incentives granted to extractives industries and curb illicit financial flows.
- Impose resource taxes on the export of raw materials from mining and other extractivist activities.
- Ensure financial transparency of and accountability from corporations in the extractive industries.
- Hold governments/parliaments, sub-national state bodies and their agencies to account for the tax abuses of mining companies and the complicity of local elites.
- Shut down harmful and abusive mining projects/companies.
- Institute and enforce tighter social, financial and environmental regulations and sanctions over the extractives sector.
- Cancel fiscal stability and other lock-in clauses in agreements with extractive industries, which restrict the fiscal and regulatory space of governments.
- Uphold the rights of communities and women affected by mining and other extractivist activities, including their right to defend their communities.
- Stop the plunder and exploitation of natural and human resources and move away from reliance on extractivist economies characterized by over-production and over-consumption.
- End the impunity of corporations in mining and other extractives industries in their tax abusive practices, including illicit financial flows.
Key Activities in the Campaign on Tax Justice in the Extractives Industry (2019-2021)
Primer on Potential Channels for Revenue Erosion, Profit Shifting, and Illicit Financial Flows in the Philippine Mining Industry
Through a research initiative, APMDD developed a comprehensive account of the institutional and legal environment that enables illicit financial flows in the Philippine extractives industry. The primer also presented cases of how this environment enabled abusive tax practices of three mining corporations in the Philippines.
Research on Harmful and Abusive Tax Incentives in Asia
As part of the Financial Transparency Coalition (FTC) Report entitled “Use and Abuse of Tax Breaks: How Tax Incentives Become Harmful,” APMDD conducted a case study on an Indonesian coal mining corporation to illustrate the channels through which fiscal incentives embedded in government-awarded mining agreements become vehicles of cross-border profit-shifting and tax avoidance.
DEEPENING UNITIES with members and partners on a campaign and advocacy agenda
APMDD participated and led activities in the Global Days of Action on Tax and Extractives as part of the Global Alliance for Tax Justice (GATJ) from November 2019 until November 2021. APMDD is also one of the convenors of the Tax and Fiscal Justice Asia (TAFJA) Tax and Extractives Working Group, which has held press briefings and discussions on tax justice issues in India, Indonesia, and the Philippines.
Together with the Tax and Fiscal Justice-Asia (TAFJA), and with the Alternative Information & Development Centre (AIDC) in South Africa and Churches and Mining Network (CaM) in Brazil, APMDD has co-organized webinars and information dissemination activities to promote demands of tax justice in the extractive industry in regional and global arenas.
PARTNERSHIPS with labor groups and communities to work together on tax and labor abuses in the extractives industry
Efforts to build constituencies in linking issues of tax abuses and violations of workers’ rights by mining corporations were strengthened in 2021, as APMDD co-organized the Asian Day of Action in November 2021 with workers’ movements jointly calling for strengthening tax and labor regulations in the industry.
APMDD continues to support country-level campaigns and advocacy work, with a view of holding mining corporations to account, ensuring financial transparency, and strengthening local communities’ voices in calls to transform tax and fiscal systems governing the extractives industry.