MANILA - A tax expert on Wednesday questioned the timing of the discussion on the Maharlika Investment Fund when the country is plagued by high inflation, high debts, a budget deficit, among others.
In an interview with ANC's Rundown, Asian Consulting Group founding chairman and chief tax advisor Mon Abrea said there are more "urgent" matters lawmakers should be discussing instead of the MIF which has no clear funding source yet.
Among the priorities should be inflation, driven by high vegetable prices such as onions, that hit 8.1 percent in December 2022.
"My first concern is why are we discussing this? What is it for when there is an economic crisis, looming recession, high inflation and not forgetting about the price of onions? There’s a lot more urgent matters to be discussed. I don’t know where Maharlika funds will fit in, in all these problems right now," Abrea said.
"The fact when the public reacted when they will be using the pension fund of SSS and GSIS… they retracted and revised the bill…I think it’s clear that the government doesn’t know exactly where it would source the fund and how can they make it profitable," he added.
The initial version suggested the use of pension funds but it was later dropped upon public backlash. Sponsors then suggested that funds must be from earnings of the Bangko Sentral ng Pilipinas, the Development Bank of the Philippines and the Landbank of the Philippines.
Albay Rep. Joey Salceda said he revised the bill and changed funding sources to come from dividends of government-owned and controlled corporations (GOCCs), which was later thumbed down by President Ferdinand Bongbong Marcos Jr.
A 1993 law dictates that 50 percent of dividends of GOCCs must be remitted back to the national treasury to fund social projects while the other 50 should be used for operations, Albay Rep. Edcel Lagman earlier said.
"The very nature of a sovereign wealth fund should come from a budget surplus which we don’t have. In fact, we have a budget deficit. More than a hundred billion, and it would continue to be deficit because we need to improve our revenue collection, so we go back again to tax collection," Abrea said.
The Philippines' budget deficit narrowed to P123.9 billion in November 2022, according to government data released in December. Meanwhile, the national government's outstanding debt hit P13.64 trillion as of November 2022.
The country's debt-to-GDP ratio was at 63.7 percent as of the end of September 2022, according to government data. Prior to the pandemic, a debt-to-GDP ratio of 60 percent is considered high in terms of global standards.
"I should be reminding Cong. Salceda to really do your job properly because we are in dire need of funding and the Maharlika Investment Fund will not address that. It would even threaten or further increase the risk of our P13 trillion debt," Abrea added.
"The problem with this fund is it's promising a return [but] there is no guarantee. But the debts have guaranteed interest that we have to pay and it will only be coming from the collection of taxes," he added.
Senator Mark Villar earlier filed the counterpart bill in the Senate. Senate Committee on Ways and Means Chairman Sherwin Gatchalian said they are open to the idea of a sovereign wealth fund but there is lot to be discussed.