The Department of Finance (DOF) has expressed support for the proposal to impose mining tax to go towards a sovereign wealth fund.
“That’s a good idea. In fact, we already have a sovereign fund but it’s called a coco levy fund. It’s similar to a sovereign fund,” Carlos Dominguez, DOF secretary, told reporters in a recent press chat at the DOF office in Manila.
“Now, funding something like this from taxes on irreplaceable resources, I think it’s a good idea,” he added.
To recall, Albay Rep. Joey Salceda said last month he is eyeing to propose higher excise tax on mining as well as additional tax to go to a sovereign wealth fund.
“For sovereign wealth, two percent (tax) from zero. All collections by one administration cannot be used by them, it can only be used by the next administration,” Salceda said last September.
Dominguez has not yet seen the details of the proposal but said it answers the question that “you are using a non-renewable resource and passing on the benefits to the future generation.”
“The idea is what they call it, intergenerational equity. You get the gold now and sell it, your grandchild cannot do it anymore, so if you take part of that and invest it in such a way he benefits, that’s a good idea,” Dominguez said.
According to Salceda, the amount collected for the sovereign wealth fund can be placed in a trust fund with the Bureau of the Treasury.
“Norway imposes (a sovereign wealth tax) on their oil and I think we should also use that on our oil if we have oil. It’s a non-repeating resource, the gold… belongs to the Philippines and belongs to the next Filipinos,” he said.
“Because you have to wait two million years… to at least produce the next ounce of gold, for example, so there at least should be intertemporal benefits across generations,” Salceda added.
According to a report released earlier this year by the National Tax Research Center, the tax research arm of the DOF, the mining industry is a significant growth driver of an economy. However, the progress of the industry in the Philippines is proceeding at an extremely slow pace.
“The limited economic and fiscal contribution of mining industry may be due to limitation in the current fiscal policy framework and development program of the national government,” the report said.
“The proposals to establish a new mining fiscal regime are timely and highly justified in order to realize the gains and benefits from the mining industry,” it added.