Finance Secretary Carlos Dominguez III has described as a “good idea” a congressional proposal to impose an additional tax on mining, the proceeds of which will be placed in a sovereign wealth fund to benefit future generations of Filipinos.
Dominguez said the proposal, introduced by Albay Rep. Joey Salceda, follows the principle of “intergenerational equity,” which ensures fairness among generations in the use and conservation of natural resources.
In this case, the concept of intergenerational equity applies to the use and conservation of the country’s rich mineral resources.
“The idea of a sovereign fund is actually a good idea,” said Dominguez in a recent press briefing. “It answers the question (of how) you’re using a non-renewable resource and passing on the benefits to future generations.”
Salceda, who chairs the House committee on ways and means, said that aside from raising the current excise taxes on mining, he will be proposing a new 2-percent tax on gross output for large-scale metallic mining that will form part of a “Natural Resource Trust Fund (NRTF).
This sovereign wealth fund will be collected by the Bureau of Internal Revenue (BIR) and accumulated over a six-year period. The Bureau of the Treasury (BTr) will manage and create a Special Account for the NRTF.
Only the next administration can tap into the sovereign wealth fund, Salceda has said.
The Albay lawmaker’s plan forms part of his proposed new fiscal regime for the mining industry under House Bill (HB) No. 5022.
Dominguez said that while he has yet to study the details of Salceda’s proposal, the idea of setting up a sovereign wealth fund by taxing irreplaceable resources like mineral resources will be beneficial to all Filipinos.
He said the government already has a coco levy fund, which is similar to a sovereign wealth fund.
Salceda’s proposal, however, will ensure that proceeds from a new mining tax would be an “intergenerational” fund that will benefit the next generations.
For instance, a finite, natural resource like gold, when mined and sold, cannot benefit future generations, Dominguez said. “But imposing a tax on mining the gold to help set up a sovereign wealth fund that will be invested to benefit future generations will ensure that every Filipino gets his or her fair share from the use of country’s natural resources.”
Dominguez likewise welcomed Salceda’s proposal to include a provision stating that the current administration cannot touch the sovereign wealth fund.