In a bid to help the stock market regain its competitiveness and cope with the global financial crisis, the Senate adopted Tuesday a motion to abolish the documentary stamp tax.
Sen. Panfilo M. Lacson, chairman of the ways and means committee, said after a hearing on the matter that the documentary stamp tax had been a double tax of sorts on players in the stock market.
“First, the tax was very cumbersome to compute. Even the Finance Department and Philippine Stock Exchange cannot agree on the amount in terms of foregone revenue. Second, it made the stock exchange uncompetitive because it was like a second tax on top of the stock transaction tax,” he said.
He said the DOF computation showed government stands to lose some P1.3 billion while the PSE computation showed a loss of P1.09 billion if the documentary stamp tax is removed.
On the other hand, Lacson noted PSE executives at the hearing had said the economy stands to lose much more if investors were turned off because of the taxation.
Lacson said he will prepare a committee report on the matter and bring it to the plenary and have it passed before the Senate goes into recess on March 6.
“The deadline is March 20. So we must pass this bill into law before we go on break on March 6. Otherwise the stock market is in for a losing proposition,” he said.
Earlier, PSE president Francis Lim said the global economic crisis has hit the Philippine stock market hard.
“We are one of worst affected in terms of daily transactions,” he added, noting the stock market’s daily transactions went down by 41% while that in Indonesia went down by less than 1%.
“Unlike other markets that are principally dependent on their locals our market is dependent on foreign portfolio,” he added.