Wealth fund should come from wealth tax:
Pera naming mga manggagawa yan, bakit kayo ang nag-uusap?
Sovereign Wealth Funds (SWFs) are essentially profit-driven
state-owned investment funds. Some of our neighboring countries who want to
make the most out of their surplus—usually foreign exchange generated from
exports—established state-owned entities to invest their excess capital on
various instruments. Singapore, Indonesia, Malaysia, among others, created
their own SWFs.
With the potential of SWFs to grow, they can distort
incentives in an economy where they are invested enough to favor specific
economic activities and enterprises. Although SWFs usually invest in foreign
instruments, there is nothing stopping them from pouring investments on
profitable economic activities and enterprises at home, thus, making SWFs a
strategic tool for industrial policy. But this is not necessarily the
motivation for the proposed Maharlika Wealth Fund.
Now, should workers support the government’s attempt to
create an SWF?
That public pension funds are identified as sources of
financing for the SWF already earns the proposed fund minus points. Public
pension funds are fragile. There is a reason both SSS and GSIS are very careful
in their investment decisions and that is because that is how they secure
future generations of Filipinos. GSIS should know the risks involved especially
in foreign money market, after all, their exposure to the 2007-2008 Global
Financial Crisis may have costed the pension fund some of its resources.
Can politicians pushing for SWF guarantee the security of
workers’ retirement funds while exposing it to potential losses from
profit-driven, speculative investment decisions? House representatives who back
the SWF argue that pension funds are guaranteed by government funds anyway, and
that the SWF will come with sufficient safeguard measures.
But NAGKAISA has a better idea to secure workers’ pensions,
and that is by not exposing them to unnecessary risks. If SWF should be
pursued, it must be funded by true surpluses generated by the economy—the
proceeds from wealth tax!
In 2020, NAGKAISA floated the idea of taxing the unused
assets of the wealthiest in the country. The tax revenue from the wealth tax
could have funded pandemic recovery measures of the government. Now that the
Philippines is gradually recovering, potential revenues from wealth tax can now
be used to fund ideas such as SWF without risking workers’ funds.
And what is this obsession about the term “Maharlika”? If
the proponents want to connect SWF to a concept from Philippine history, then
they should have kept in mind that the Philippine government does not have a
good record in managing public funds. That fact is also historical. Unless the
proponents have concrete plans about protecting the SWF from turning into a
Maharlika Wealth Scam, House Bill 6398 cannot just be allowed to pass. In any
case, workers remain critical of this proposal especially when their pensions
are on the line.
NAGKAISA Labor Coalition
03 December 2022
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