Gold mine in Cocula, Guerrero. Gold mine in Cocula, Guerrero.

Guerrero wants mines to pay higher taxes

Politicians also want to see more benefits for local communities

Members of the Guerrero Congress have voted unanimously to raise taxes for mining companies, but the measure will require the support of the federal government to be implemented.

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Isidro Duarte Cabrera, a Deputy with the Democratic Revolution Party (PRD) who also serves as the president of the state Commission on Development, Agriculture and Fisheries, presented the motion, arguing that the contributions received from mining companies by municipal governments are inadequate.

Duarte proposed petitioning President Enrique Peña Nieto to instruct the Secretariat of Economy to cooperate with the Secretariat of Finance to look for mechanisms to increase taxes on mining companies.

Duarte also proposed the establishment of a state trust to manage the contributions received from mining companies so that they are invested efficiently in development projects in communities where mining occurs.

He called on Governor Héctor Astudillo to initiate that process.

Under federal law mining companies are required to contribute 7.5% of their income in taxes with a further 0.5% for extracting precious metals such as gold, silver and platinum.

Of that tax revenue, 77.5% is assigned to the federal government’s Regional Sustainable Development Fund for States and Municipalities, also known as the Mining Fund, which then redistributes the funds.

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However, the allocation of tax contributions paid by mining companies — some of them transnationals — that reached municipal governments in Guerrero in 2016 represented less than 1% of their profits, Duarte argued, citing figures that show the net income of mining companies in the state to be almost 5.38 billion pesos (US $294 million) but municipalities only received just over 52 million pesos or 0.96% of the income.

Of the eight municipalities with mining activity, just one — Eduardo Neri — received sufficient contributions to undertake development projects in its communities while the others received only token amounts.

The politician explained that mining was particularly lucrative because companies were able to deduct the amounts they have invested in projects from the taxes they are required to pay. He also claimed that mines cause irreversible ecological damage in the areas where they operate.

Public works and projects carried out by the companies don’t compensate for the environmental harm that they cause or contribute to the development of local municipalities, he added.

That occurs, Duarte charged, because the federal government grants mining concessions without any involvement from the states or the communities where mining activity occurs.

Between 2011 and 2015 more than 250,000 tonnes of gold and silver were extracted in the state, representing an income of just over 34.5 billion pesos to mining companies.

Mexico is the world’s biggest producer of silver and mining is important to the national economy, representing around 5.5% of gross domestic product (GDP) although investment in the sector declined in recent years before increasing again in 2016.

Source: Milenio (sp)

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