The newly-approved version of the government’s tax reform bill, which aims to lessen income taxes, may possibly hurt the competitiveness of the country’s equities, according to the Philippine Stock Exchange (PSE).
However, the PSE voiced out worry over this new initiative.
PSE Ramon Monzon told reporters that the increase would raise the transaction tax for the Philippine stock market to 0.6 percent from the current 0.5 percent which is the highest in the Southeast Asian region.
“In absolute terms it seems to be a small insignificant increase, but really, that increase represents a 20-percent increase from the present one”, he said.
Monzon also noted that the PSE is also competing with exchanges of other countries like Thailand, Malaysia, Indonesia, and Vietnam “for the money of foreign investors”. Increasing the stock transaction tax would also increase the friction cost, he explained.
“We have to be very conscious of what the other capital markets are doing in the region or even globally. Foreign investors will always go to a place where transaction cost is less. It’s not enough to make money on the trade. If you had the transaction cost, then you become very uncompetitive with other stock exchanges”, according to the PSE chief.
He also emphasized the need to exert a lot of effort to raise the value in the local stock market.
Currently, the value turnover at the stock market remain the same, if not less, with last year’s volume.
Excise tax hikes on coal, tobacco, minerals are also included in the proposal, according to a report by the Philippine Star.
The TRAIN is now awaiting the President’s signature after being approved by the bicameral conference committee.
Story first appeared here.