Senate moves to abolish documentary stamp tax

In a bid to help the local stock market regain its competitiveness and cope with the global financial crisis, the Senate ways and means committee moved yesterday to abolish the documentary stamp tax (DST).

After a hearing on the matter, Sen. Panfilo M. Lacson, committee chairman, said 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,” Lacson said.

Based on the Department of Finance computation, the 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 who attended the hearing said the economy would lose much more if investors were turned off because of the tax.

Lacson said he would prepare a committee report on the matter and bring it to the plenary and have it passed before the congressional break on March 6.

The collection of the documentary stamp tax was suspended on March 20, 2004 and will lapse on March 20 of this year.

Lacson filed Resolution No. 3006 to extend the suspension while Sen. Edgardo Angara filed Senate Bill No. 2497 to exempt the sale, barter or exchange of shares of stock from documentary stamp tax.

“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 had hit the Philippine stock market hard.

“We are one of the worst affected in terms of daily transactions,” Lim said, noting the stock market’s daily transactions went down by 41 percent while that in Indonesia went down by less than one percent.

“Unlike other markets that are principally dependent on their locals our market is dependent on foreign portfolio,” he added.