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By Likha Cuevas-Miel, Reporter
President Gloria Arroyo is
supporting the plan to cut taxes on stock-trading transactions to
attract more investors to the bourse, the Philippine Stock Exchange
said Monday.
In a statement, the local bourse
said the President has urged Congress to look into the proposal of
cutting the transaction tax by half— a call she made earlier
during her speech at the signing of the Credit Information System
Law.
Sellers of shares of stock are
currently charged a stock-transaction tax equivalent to 0.5 percent
of the gross value of the shares being sold and the Philippine Stock
Exchange hopes to bring this down to 0.25 percent.
Also, the exchange has also been
lobbying for an extension of the documentary stamp tax (DST)
exemption, which will expire in March next year.
Trading of shares through the
local bourse is currently exempted from stamp tax for five years, as
provided under Republic Act 9243. Before this was signed into law on
March 2004, the documentary stamp tax of P0.75 was collected for
every P200 par value of stock traded.
“Even before this financial
crisis that we are facing, our stock market has been lagging way
behind compared with our Asian neighbors,” said Francis Ed. Lim,
stock exchange president. “The support of the President to these
twin measures of extending the DST exemption on stock trading beyond
2009 and the reduction of the stock transaction tax are some of the
key signals that our investors have long been waiting for.”
Based on a study by the exchange,
imposing the documentary stamp tax again on the secondary trading of
shares of stocks would add 0.10 percent of the value of the shares
to the cost of trading.
Lim said the trading volume has
increased since 2004, which coincided with the suspension of
documentary stamp tax collection. In 2003, the average daily value
turnover jumped from P589 million in 2003 to a record high of P5.5
billion last year.
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