THE House Committee on House Ways and Means approved last Tuesday an unnumbered substitute bill that would boost stock market volumes and may benefit pension funds of the Government Service Insurance System (GSIS), the Social Security System (SSS) and the Philippine Insurance Corp. (PhilHealth), as well as corporate pension plans provided to employees.
The panel chairman, Albay Rep. Ma. Jose Clemente “Joey” S. Salceda, said the proposed Capital Market Efficiency Promotion Act addresses the stagnation of the Philippine stock market. Salceda said the slump was at the expense of pensioners, small investors and others whose incomes rely on these passive investments.
According to the lawmaker, the proposal includes an outright reduction of the stock transaction tax (STT) from 0.6 percent to 0.1 percent and an expansion of the definition of shares of stock to include options, derivatives and short-selling. The unnumbered bill also seeks the removal of the gross receipts tax of 7 percent on net trading gains by banks and financial institutions, as well as a reduction of the tax on dividends to non-resident aliens from 25 percent to 10 percent.
Likewise, Salceda said the expansion of the definition of shares of stocks was made upon the proposal of the Philippine Stock Exchange (PSE) Inc., a private non-profit and non-stock organization overseeing the market.
The economist-solon said the PSE also shares the belief that the increase in transaction volumes needed to make the stock transaction tax reduction neutral is “achievable.”
THE substitute bill also removed the debt transaction tax originally proposed in HB 8958, at the suggestion of the Bankers Association of the Philippines.
“This proposal will also help potential listings in the market, including the Maharlika Investment Fund and the proposed listing of shares of the Landbank of the Philippines. Once offered to the public, shares of these GFIs will create new resources for national development,” Salceda said.
Salceda said he also pushed the Securities and Exchange Commission (SEC) to undertake measures to protect small retail investors in the stock market.
He said he’s mandating the Bureau of Internal Revenue (BIR), the PSE and the SEC “to resolve the issue of stock dividends not yet issued by the Philippine National Bank.”
“That issue has gone on for a few years now; and if the problem is with the BIR not issuing the certificate authorizing registration, we should be able to solve that among government agencies,” Salceda added.
The lawmaker said he also asked the SEC and the PSE to relax rules on listing “to disrupt the ‘Big Boys Club’ in the PSE and increase options for the average investor.”
According to Salceda, the market has only 280 listed companies while the country’s neighbors are now ranging from 480 to 600.
“Our rules, which focus on earnings, completely lock out startups,” he added.