The House tax panel approved on Monday, Dec. 5, the tax provisions of the proposed House Bill (HB) No. 6398, or the Maharlika Investment Fund Act, which will ensure that tax benefits go to the investment fund rather than line the pockets of executives and other officials.
Albay 2nd District Rep. Joey Salceda, chair of the House Ways and Means who led the approval of the tax provisions, introduced more safeguards to the bill in preparation for its discussion in the House floor.
The approved tax provisions were those drafted by the tax committee’s team and were already adopted in the technical working group (TWG) prior to the meeting.
In a statement, Salceda said that the tax provisions ensure that the benefits of the tax savings go purely towards the investment fund, increasing potential returns for the Social Security System (SSS) and the Government Service Insurance System (GSIS).
“Some P680 million in tax savings will inure to the fund every year as a result of this exemption. That goes towards making the SSS and GSIS funds more robust. That means more funds for pensions,” he explained.
Recognizing the controversies surrounding the bill, the lawmaker assured members of the minority in the House tax committee that all concerns raised on the provision will be considered, as the House TWG version “is still evolving.”
Under the provision which Salceda proposed in the TWG, a safeguard ensures “that the exemptions granted herein shall be utilized actually, directly, exclusively and solely for the transactions of or involving the MWFC and MWF, and not for the purposes of MWFC executives and/or employees, third parties, and other distinct taxable entities.”
Salceda said this ensures that the Fund will not be used as a pass-through to allow others to evade taxes.
However, Assistant Minority Leader and Gabriela Women's Party-list Rep. Arlene Brosas vehemently opposed the creation of the Maharlika Wealth Fund (MWF), saying that such funds are prone to corruption and abuse.
Brosas was not in attendance, but fellow Makabayan bloc and ACT Teachers Party-list Rep. France Castro was there.
"Hindi pa nakuntento sa (They are not yet contented with the) confidential at (and) intelligence fund, gusto pa ng (they want) Maharlika Fund na maaaring maging balon ng korapsyon tulad ng (that could become a well of corruption like the) Coco Levy Fund scam noong panahon ni (during the time of) Marcos Sr.," she said in a separate statement.
Calling on Filipinos to oppose the MWF, which is set to be approved on Dec. 12, the lawmaker stressed that SSS and GSIS funds are private funds and that pensioners should be the ones to decide what to do with them.
The MWF will get its seed money for State investments from the SSS and GSIS.
During her interpellation, Castro questioned the source of the P275-billion MWF and raised concern because the House had already announced the bill would be approved.
Instead of getting the money from the pensioners’ fund, the lawmaker said it could be sourced from the confidential funds instead.
“Sorry, Mr. Chair, medyo masama ‘yun loob ko dun sa pagpayag na ilagay pa rin ‘yun (I feel bad for allowing the) NTF-ELCAC doon saka mga (to be included in the) confidential funds. Pwede tayo magtanggal sa (We can get from) confidential funds, ilagay na lang dito. Yung NTF ilagay na lang dito kasi wala naman pakinabang ‘yun (put it here. The NTF should be put here instead because it has no use),” she explained.
Meanwhile, Salceda also proposed new safeguards to the mother committee, the Committee on Banks and Financial Intermediaries, to make the bill “airtight.”
As a general principle, Salceda introduced an amendment that “all transactions of the MWFC shall abide by the arm’s length principle and the prudent person rule.”
This ensures that the Fund does not take positions that disadvantage it.
The lawmaker proposed “that at least one independent director shall be an SSS or GSIS member or pensioner” to address the concern on pensioner representation in the Fund’s governance.