THE Philippine Stock Exchange (PSE) on Sunday praised the decision of President Gloria Macapagal-Arroyo permanently abolishing the documentary stamp tax (DST) on secondary trading of shares which is expected to stimulate market and economic activity. 

“During a period of heightened risk aversion, bringing down the costs of doing business is a crucial trade-off to attract investments. Removing taxes such as the DST enables the country to create a favorable business climate amidst this global crisis,” PSE president and chief executive officer Francis Lim said.

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Lim thanked the President and legislators, saying this law will help make the stock market more robust as investors would be enticed to place their money in high-yielding instruments minus the friction costs.

“The law frees up liquidity which investors need in order to place their money in equities again, instead of paying DST. But more than just developing the market for the long-term, we are also aiding the government in enhancing the Philippines as an investment destination by increasing the competitiveness of our bourse relative to our Asian counterparts,” Lim said.

An earlier law that exempted DST for five years expired last March 20, 2009. Prior to this exemption, the secondary trading of shares was levied a DST equivalent to 75 centavos for every 200-peso par value of a stock listed at the exchange.

“With the abolition of the DST becoming a law, I can say that we are slowly gaining ground in positioning the Exchange at par with our Asian counterparts. We, in the PSE, are thankful that our legislators recognize the need to grow the stock market as one of the means to strengthen the Philippine economy,” Lim added. 

The DST Law is the third capital market-friendly legislation passed after the Personal and Equity Retirement Account Law and Credit Information System Law were enacted last year. The House of Representatives and the Senate also passed on third reading the Real Estate Investment Trust bills before Congress went on recess last March 7, 2009.

The DST Law was first introduced by Aurora Representative Juan Edgardo Angara through House Bill (HB) 4900. A similar measure, Senate Bill (SB) 2497, was filed by Senator Edgardo Angara. SB 3006 meantime was authored by Senator Panfilo Lacson.

Lacson and Representative Exequiel Javier, chairmen of the Senate and House committees on ways and means, steered the bill in Congress. (MSN/Sunnex)