In a chat with reporters, PSE president Ramon Monzon said the local stock market would now have to live with a 10-basis point increase in the stock transaction tax from 0.5 per cent (or one half of 1 per cent) to 0.6 per cent.

This was among the “offsetting” measures included in the TRAIN as the government sought to lower individual income taxes and boost the net take home pay of the average Filipino.

“In absolute terms it seems to be a small insignificant increase, but really, that increase represents a 20-per cent increase from the present one,” Monzon said.

“What we have to understand is the PSE does not operate in the local market alone. We compete with other exchanges—whether Thailand, Malaysia, Indonesia and Vietnam—we compete for the money of the foreign investors. When you increase the stock transaction tax, you’re increasing the friction cost,” he said.

Monzon said the existing 0.5 per cent stock transaction tax in the Philippines was already the highest in the region.

In Malaysia, stock transactions at the Bursa Malaysia are charged with only 30 basis points of the transaction value in the form of stamp duty while in Hong Kong Exchanges, the charge is only 10 basis points of the transaction value in the form of stamp duty. In Vietnam, a capital gains tax equivalent to 10 basis points of gross sale proceeds is levied on transactions through the Ho Chi Minh Exchange.

Singapore, a key financial center in the region, does not impose any stock transaction tax. Thailand also exempts stock transactions from taxes if they involve registered securities where the Thailand securities depository is the registrar.