MARCOPPER: TAX ISSUES
A YEAR after the infamous March 24,1996 spillage of mine tailings into the largest river channel in Marinduque, public outcry over proposed methods for the disposal of tailings rose to a high crescendo. The mining company, probably felt pushed to the wall, relentlessly paid ads in newspapers, both local and national, installed giant billboards in strategic points in Marinduque including Balanacan Port and the Marinduque Airport, distributed flyers in the thousands "so the people may know". Specifically, to "put on record what benefits and economic contributions its mining operation had generated both for the country in general and Marinduque in particular".
It expressly claimed having paid "PHP 6.5 billion in direct and indirect taxes, contributed US$ 1.3 billion in foreign exchange earnings, provided employment to an average of 1,500 employees with salaries and benefits of over PHP 3.3 billion, invested PHP 247 million in community assistance, generated PHP 635 million in domestic business, and supplied electricity to Marinduque subsidizing electric cost that totaled over PHP 100 million", etc. etc. In a brief span of one year after the disastr it also claimed to have spent USD 40 million for the tunnel and Boac river rehabilitation.
And then Marcopper asked: "Can anybody argue that this is not a more than fair return for the change in the environment that our mining operations had caused?"
"Anong durong kuwarta noon!", might well have been the wide-eyed reaction of the affected families, farmers, fisherfolks, students, professionals, politicians and the unemploed who ever bothered to read the lengthy English and Tagalog ads and flyers. The billboards were in Tagalog.
But these stakeholders must have later also wondered really why the mining firm has been so quitclaim-stingy on the payment of compensation for affected families, the more substantial amount of which is yet to be paid nine years after the tragedy?
Marcopper pays direct and indirect taxes for "income tax, excise tax, customs duties, value added tax, real property taxes, etc." But look now. According to Marcopper Mining Corporation's official audited records, income taxes paid during the period 1980 were as follows:
"1980: P. 45,930,000 1981: P. 0.00 1982: 0.00 1983: P. 7,366,000 1984: P 0.00 1985: P. 0.00 1986: P 0.00 1987: 0.00 1988: P. 174,277,000 1989: 124,825,000"
During the same 10-year period the corporation did not pay (or deferred payment) for "stabilization tax/export and premium duty" except in 1984 when P. 7,649,000 were paid. In 'royalty taxes' P 294,289,000 were paid over the same 10-year period. A grand total of a P 670,366,000 (million, not the whooping billion yet), for taxes in 10 years' time. Foreign exchange earnings totaled US$ 523,937,000 according to the same records.
According to Marcopper's performance records claim, its total sales of concentrate for the same 10-year period is P 7.58 billion or an average of P758-million annually. Naman, naman!
The plain truth is that due to the decline in world market price of coppr, distressed mining companies were extended tax relief by suspending payment of all taxes, duties, fees, and other charges, whether direct or indirect, due and payable to the national and local government. In 1984, the company was issued a certificat of eligibility to suspend tax payment, which explains why Marcopper did not pay taxes for certain years. (Mostly during the Marcos years and in 1987 after the takeover of the Cory government).
Pursuant to Executive Order No. 340 issued in 1988, by President Aquino (lifting the tax suspension of the distressed copper mining companies during the years from 1984-1987), the company paid in 1989 P. 66,709,000 of its deferred tax liabilities under Letter of Instruction No. 1416 leaving a balance of P 748,176,000 as of December 31, 1989.
A year earlier, Marcopper had filed an appeal with the government for condonation pursuant to Presidential Decree No. 2027 (issued by Marcos), which allowed for the waiver of the payment of these taxes. Issued three weeks before EDSA I, the said Decree, however, did not have any covering implementing rules and regulations. For payment of their balance, the company negotiated with the Department of Trade and Industry nd submitted a proposed schedule of payment, as Marcopper's own official report stated. Marcopper also claimed in 1989 and 1990, that "most indirect taxes for other years are not known".
It will be recalled that by the year 1990, the Tapian orebody had been completely mined out. Marcopper's application for registration of the San Antonio Project as a new project commencing in the same year was then approved by the Board of Investments. Approval of the registration as a 'new project' meant that the company was entitled to the enjoment of a new five (5) year income tax holiday. 'Tax Holiday' is in fact the official term for the favor.
Whence did Marcopper's claim come from then? Of course that's propaganda. Marcopper's boastful and deliberate assertions were apparently lifted from the extremely optimistic propagandistic projections it envisioned in 1990, in connection with the new San Antonio project. In its 1989 Annual Report and other official papers, the company stated that during the estimated 20 years of the new project's operating life (1991-2011), "basing it on an average copper price of USD 1.10 per pound... numerous and significant contributions to the national and provincial economies... would be as follows:" (and here we quote):
"1. PHP 6.5 billion in taxes
"2. US$ 1.3 billion in foreign exchange earnings.
"3. Employment of over 1,500 people with a yearly payroll and fringe benefits of over PHp 100-million.
"4. Continuation of Marcopper's community development and barangay assistance program, which in the past 20 years, calculated in 1988 pesos, cost the company over P. 55 million, which includes donations, the establishment of self-help programs, road construction and improvement, building of schools, infrastructures and recreational facilities, etc., all for the betterment of the people of Marinduque.
"5. P. 500 million per year on local purchases of supplies and services which also generates considerable employment.
"6. Continued supply of electricity to the Province of Marinduque"
Putting "on record" what the mining company "paid" and "had generated both for the country in general and Marinduque in particular" using what obviously were figures lifted from the said 1990 "projected foreign exchange earnings and taxes TO BE PAID to the government" seemed curious, to say the least. That's just for Nos. 1 & 2 in the above enumeration.
For No. 3 above, on record, by end of 1989, Marcopper had 1,050 regular and probationary employees at the minesite, with 74 employed at the head office; had around 800 employees when a labor strike occured in early 1996.
For No. 4 above: P 55-million in community development and barangay assistance were spent in 20 years as specified in the 1989 Marcopper Report published the following year. For no apparent reason, the company just decided to be generous by spending P 192 million more in community development during the next five years of distress?
For No. 5: Earlier claim was P 500 million. The company was certainly capable of generating P 635 million in domestic business, but one wonders why the figures are not consistent. As regards the supply of electricity, Marcopper had long ceased to provide this type of positive service, a decision preceded by a demand from the company in June 1997, for an increase in the rate of purchased power, largely perceived to be some kind of tailings-spill related psy-war leveled against the people of the island.
None, no one, appeared to have ever questioned, or studied, the company's "SA IKALILIWANAG NG LAHAT" propaganda materuial. Perhaps cowed or discouraged by the brazen methods and audacity by which they were made? Revenue authorities would know about is and could run agfter them anyway, perhaps, or so a people living in a lethargic, feudalistic environment so thought? Or everyone probably just gulped all the claims without question - hook, line and sinker!
Yet, looking back, within a year before the onslaught of the river pillage and spillage one could recall discussions at the Sangguniang Panlalawigan of Marinduque (Provincial Board), on how Marcopper could be made to pay property taxes to the province instead of to Makati as claimed, the provincial coffers being empty. Sources say taxes owed the province for all those years of mining operation had accumulated from a low of 150 million to a high of P 850 million. That could really have helped the provincial economy if paid then. And then one wonders why the province's leaders all that time did not lift a finger.
All these facts and figures have very serious implications in the way Marcopper makes claims and the methodology they have always imposed, past and present, when addressing current issues related to the damages wrought on the island, its rivers and shores and the impact of the damages on the health of the people living on the island.
These also have very discomforting, disturbing political and social repercussions not all to easy to ignore now. But maybe, we Marinduquenos as a people have known and accepted many of these things all along. Took them all for granted. Ah, yes we have, and the light at the end of the tunnel appears distant. /eli
It expressly claimed having paid "PHP 6.5 billion in direct and indirect taxes, contributed US$ 1.3 billion in foreign exchange earnings, provided employment to an average of 1,500 employees with salaries and benefits of over PHP 3.3 billion, invested PHP 247 million in community assistance, generated PHP 635 million in domestic business, and supplied electricity to Marinduque subsidizing electric cost that totaled over PHP 100 million", etc. etc. In a brief span of one year after the disastr it also claimed to have spent USD 40 million for the tunnel and Boac river rehabilitation.
And then Marcopper asked: "Can anybody argue that this is not a more than fair return for the change in the environment that our mining operations had caused?"
"Anong durong kuwarta noon!", might well have been the wide-eyed reaction of the affected families, farmers, fisherfolks, students, professionals, politicians and the unemploed who ever bothered to read the lengthy English and Tagalog ads and flyers. The billboards were in Tagalog.
But these stakeholders must have later also wondered really why the mining firm has been so quitclaim-stingy on the payment of compensation for affected families, the more substantial amount of which is yet to be paid nine years after the tragedy?
Marcopper pays direct and indirect taxes for "income tax, excise tax, customs duties, value added tax, real property taxes, etc." But look now. According to Marcopper Mining Corporation's official audited records, income taxes paid during the period 1980 were as follows:
"1980: P. 45,930,000 1981: P. 0.00 1982: 0.00 1983: P. 7,366,000 1984: P 0.00 1985: P. 0.00 1986: P 0.00 1987: 0.00 1988: P. 174,277,000 1989: 124,825,000"
During the same 10-year period the corporation did not pay (or deferred payment) for "stabilization tax/export and premium duty" except in 1984 when P. 7,649,000 were paid. In 'royalty taxes' P 294,289,000 were paid over the same 10-year period. A grand total of a P 670,366,000 (million, not the whooping billion yet), for taxes in 10 years' time. Foreign exchange earnings totaled US$ 523,937,000 according to the same records.
According to Marcopper's performance records claim, its total sales of concentrate for the same 10-year period is P 7.58 billion or an average of P758-million annually. Naman, naman!
The plain truth is that due to the decline in world market price of coppr, distressed mining companies were extended tax relief by suspending payment of all taxes, duties, fees, and other charges, whether direct or indirect, due and payable to the national and local government. In 1984, the company was issued a certificat of eligibility to suspend tax payment, which explains why Marcopper did not pay taxes for certain years. (Mostly during the Marcos years and in 1987 after the takeover of the Cory government).
Pursuant to Executive Order No. 340 issued in 1988, by President Aquino (lifting the tax suspension of the distressed copper mining companies during the years from 1984-1987), the company paid in 1989 P. 66,709,000 of its deferred tax liabilities under Letter of Instruction No. 1416 leaving a balance of P 748,176,000 as of December 31, 1989.
A year earlier, Marcopper had filed an appeal with the government for condonation pursuant to Presidential Decree No. 2027 (issued by Marcos), which allowed for the waiver of the payment of these taxes. Issued three weeks before EDSA I, the said Decree, however, did not have any covering implementing rules and regulations. For payment of their balance, the company negotiated with the Department of Trade and Industry nd submitted a proposed schedule of payment, as Marcopper's own official report stated. Marcopper also claimed in 1989 and 1990, that "most indirect taxes for other years are not known".
It will be recalled that by the year 1990, the Tapian orebody had been completely mined out. Marcopper's application for registration of the San Antonio Project as a new project commencing in the same year was then approved by the Board of Investments. Approval of the registration as a 'new project' meant that the company was entitled to the enjoment of a new five (5) year income tax holiday. 'Tax Holiday' is in fact the official term for the favor.
Whence did Marcopper's claim come from then? Of course that's propaganda. Marcopper's boastful and deliberate assertions were apparently lifted from the extremely optimistic propagandistic projections it envisioned in 1990, in connection with the new San Antonio project. In its 1989 Annual Report and other official papers, the company stated that during the estimated 20 years of the new project's operating life (1991-2011), "basing it on an average copper price of USD 1.10 per pound... numerous and significant contributions to the national and provincial economies... would be as follows:" (and here we quote):
"1. PHP 6.5 billion in taxes
"2. US$ 1.3 billion in foreign exchange earnings.
"3. Employment of over 1,500 people with a yearly payroll and fringe benefits of over PHp 100-million.
"4. Continuation of Marcopper's community development and barangay assistance program, which in the past 20 years, calculated in 1988 pesos, cost the company over P. 55 million, which includes donations, the establishment of self-help programs, road construction and improvement, building of schools, infrastructures and recreational facilities, etc., all for the betterment of the people of Marinduque.
"5. P. 500 million per year on local purchases of supplies and services which also generates considerable employment.
"6. Continued supply of electricity to the Province of Marinduque"
Putting "on record" what the mining company "paid" and "had generated both for the country in general and Marinduque in particular" using what obviously were figures lifted from the said 1990 "projected foreign exchange earnings and taxes TO BE PAID to the government" seemed curious, to say the least. That's just for Nos. 1 & 2 in the above enumeration.
For No. 3 above, on record, by end of 1989, Marcopper had 1,050 regular and probationary employees at the minesite, with 74 employed at the head office; had around 800 employees when a labor strike occured in early 1996.
For No. 4 above: P 55-million in community development and barangay assistance were spent in 20 years as specified in the 1989 Marcopper Report published the following year. For no apparent reason, the company just decided to be generous by spending P 192 million more in community development during the next five years of distress?
For No. 5: Earlier claim was P 500 million. The company was certainly capable of generating P 635 million in domestic business, but one wonders why the figures are not consistent. As regards the supply of electricity, Marcopper had long ceased to provide this type of positive service, a decision preceded by a demand from the company in June 1997, for an increase in the rate of purchased power, largely perceived to be some kind of tailings-spill related psy-war leveled against the people of the island.
None, no one, appeared to have ever questioned, or studied, the company's "SA IKALILIWANAG NG LAHAT" propaganda materuial. Perhaps cowed or discouraged by the brazen methods and audacity by which they were made? Revenue authorities would know about is and could run agfter them anyway, perhaps, or so a people living in a lethargic, feudalistic environment so thought? Or everyone probably just gulped all the claims without question - hook, line and sinker!
Yet, looking back, within a year before the onslaught of the river pillage and spillage one could recall discussions at the Sangguniang Panlalawigan of Marinduque (Provincial Board), on how Marcopper could be made to pay property taxes to the province instead of to Makati as claimed, the provincial coffers being empty. Sources say taxes owed the province for all those years of mining operation had accumulated from a low of 150 million to a high of P 850 million. That could really have helped the provincial economy if paid then. And then one wonders why the province's leaders all that time did not lift a finger.
All these facts and figures have very serious implications in the way Marcopper makes claims and the methodology they have always imposed, past and present, when addressing current issues related to the damages wrought on the island, its rivers and shores and the impact of the damages on the health of the people living on the island.
These also have very discomforting, disturbing political and social repercussions not all to easy to ignore now. But maybe, we Marinduquenos as a people have known and accepted many of these things all along. Took them all for granted. Ah, yes we have, and the light at the end of the tunnel appears distant. /eli
posted by balangaw @ 5:47 PM
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