Is the GSIS-SSS Seed Capital in the Maharlika Fund a Tax?: A Comment on House Bill No. 6398, S. 2022

Document Type

Article

Publication Date

5-2023

Abstract

The Maharlika Investment Fund, a priority in the legislative agenda of President Ferdinand Marcos Jr., will soon become a reality as the House of Representatives and the Senate have passed respective bikes providing for this. While the very concept of a sovereign wealth fund ("SWF") has faced various pushbacks and controversies since its inception, the most vocal dissent has stemmed from the proposed use of social security finds for the initial capitalization of the SWF--as contained in House Bill No. 6398, s. 2022, the first Maharlika Fund bill. Even if the most recent Maharlika proposal deletes the infusion of social security monies in the SWF, nothing prevents Congress from exercising its lawmaking prerogative to revive the capitalization funding from the Government Service Insurance System (GSIS) and Social Security System (SCS) through an amendatory law. This article explains why such a move is legally untenable from the lens of tax law and constitutional law principles. The paper recaps rudimentary jurisprudence on taxation. Proceeding from this review, the article then argues that any mandatory contribution of GSIS and SSS funds to the SWF by way of legislation constitutes a form of confiscatory taxation on capital. Hence, a statutorily obligated capital infusion from GSIS and SSS to the Maharika Fund is an unconstitutional levy.

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