The wealth tax is on top of another proposal increasing the excise tax on the gross revenues of mining companies from 4 percent to 5 percent.

The wealth fund may be created using funds generated by the proposed increase in mining tax. The mining industry contributed P78.58 million or 0.7 percent to the country’s gross domestic product in the first six months this year.

Finance officials propose imposing a tax on the extraction of non-renewable resources and by it create a sovereign wealth fund.

Finance Secretary Carlos Dominguez III particularly likes the idea, saying such a fund fosters “intergenerational equity” in which the actions of one generation benefits the next.

According to Dominguez, such a fund may be created using funds generated by the proposed increase in mining tax.

“First of all, the idea of a sovereign fund is actually a good idea. In fact, we already have a sovereign fund but it’s called the coco levy fund,” Dominguez said. The coco levy fund relates to the wealth created by imposing a tax on coconut farmers under then President Ferdinand Marcos. The Supreme Court has since ruled that the more than P100 billion coco levy fund is public in character and has set aside a large portion of the fund for the benefit of the coconut industry.

“It’s similar to a sovereign fund. Now, funding something like this from a tax on irreplaceable resources, I think, is a good idea,” he added.

“The idea is called intergenerational equity. You get the gold now, sell and invest it in such a way that the next generation benefits. That’s a good idea,” Dominguez said.

Albay Second District Rep. Clemente Joey Salceda first proposed the creation of a wealth fund from a proposed 2 percent wealth tax on mining activities. The wealth tax is on top of another proposal increasing the excise tax on the gross revenues of mining companies from 4 percent to 5 percent.

Salceda proposed the administration creating the sovereign wealth fund is barred from enjoying the benefits such a structure brings.

“It can only be used by the next administration. There’s a six-year accumulation” period, the lawmaker explained.

According to Dominguez, he has discussed with Salceda the planned adjustment in the mining tax but not the idea of sovereign fund using excise tax collection. Still, the Finance chief thinks it is a good idea to include such tax in the proposal.

“We talked to (Salceda) about the mining tax. If he added it on, I haven’t seen the details, but I think it’s a good idea,” Dominguez said.

Data from the Philippine Statistics Authority show the mining industry contributed P78.58 million or 0.7 percent to the country’s gross domestic product in the first six months this year.