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By Chino S. Leyco, Reporter
THE government is willing to forgo revenues from stock market
players even as it is pushing for a cut in the interest income that
Manila Electric Co. (Meralco) customers—both households and
businesses—stand to earn from a refund ordered for this month.
The Department of Finance is endorsing the
extension of the documentary stamp tax (DST)—exempt privilege of
stock market players, while the Bureau of Internal Revenue (BIR) is
mulling over a levy on the interest income customers of Meralco
earned on meter deposits.
Finance Undersecretary Gil Beltran said the
government is prepared to lose P1.5 billion in revenues from the
one-year extension of the DST exemption of stock market
transactions.
In contrast, the Bureau of Internal Revenue plan
to tax the interest income Meralco customers earned on their meter
deposits would raise only P70 million, or way below the potential
tax take from the DST on stock transactions. The Energy Regulatory
Commission (ERC) had ordered Meralco to refund these meter deposits
and the interest income on them.
President Arroyo already asked Congress to look
into the proposal of extending the tax-exemption privilege of stock
transactions to lure more investors into the Philippines and
stimulate market acti vity, Beltran said.
To date, the trading of shares is exempted from
the DST until March next year as provided under Republic Act No.
9243.
Before the enactment of this law in March 2004,
secondary trading of shares of stocks were subject to a DST
equivalent to P0.75 for every P200 par value of a stock listed at
the Philippine Stock Exchange (PSE).
The Philippine Stock Exchange said bringing back
the imposition of DST on the secondary trading of shares of stocks
would put an additional burden on investors equivalent to 0.10
percent of the value of the shares they trade at the exchange.
“Trading activity in the stock market has
posted significant increases since 2004 and I think it is no
accident that this rise coincided with the suspension of the
collection by government of DST on stock trading,” Francisco Lim,
PSE president and chief executive had said.
Data showed that in 2003, the average daily
value turnover in the exchange jumped from P589 million to a record
high of P5.5 billion.
As for the proposal to reduce the stock
transaction tax from 0.5 percent to 0.25 percent, the Finance
department said it has yet to see the proposal.
The Revenue bureau is hard-pressed to meet its
collection target this year and next, as the government aims to pump
prime the domestic economy amid a global slowdown. The agency, which
accounts for the bulk of state revenues, has so far failed to hit
its collection target.
A BIR source said the agency is considering a
10-percent withholding tax on interest income from deposits for
electric meters that subscribers had paid to Meralco. The ERC had
ordered Meralco to undertake the refund, which would cost P2.8
billion, this month. Of the P2.8 billion refund, P2.1 billion
represents principal while the remaining P700 million is interest,
which may soon be subject to the 10-percent withholding tax.
Private subscribers are entitled to interest
income on their meter deposits in accordance with the rates
stipulated in the rules.
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