A House bill that seeks to permanently exempt stock transactions from documentary stamp tax (DST) may lower investment costs a bit, but was unlikely to stimulate market activity, an analyst said yesterday.

Claire S. Quiray of Accord Capital Equities Corp. said savings from the exemption — endorsed by the House ways and means committee on Tuesday — would be minimal.

"It’s a welcome help, but it would still have a difficulty attracting new investors. If the exchange will take out the sales tax, then maybe that’s the time when more investors will enter the market, especially foreign investors," she said.

Ms. Quiray noted that stamp tax is based on a stock’s par value, which is small. The sales tax, on the other hand, is based on the market price of a listed company.

The analyst added that the stamp tax is not sensitive to the ups and downs of the market since the par value of a stock is fixed unless a listed company restructures its capital.

"Since the sales tax is based on the market price, its added cost on the transaction is still bigger especially during the market’s peak," she pointed out.

Astro C. del Castillo of brokerage First Grade Holdings, Inc. said the proposed stamp tax exemption would attract investors, no matter how small their savings will be.

"This would lessen their transaction costs. The country also has one of the highest stamp taxes in Asia," he pointed out.

In a statement, the Philippine Stock Exchange said the exemption could lure more investors and stimulate market activity.

"The bill would spur market activity since this would diminish costs of investing in our stock market," the bourse said.

House Bill 4900 seeks to permanently exempt stock transactions from the stamp tax amounting to 75 centavos per every P200 par value. This will leave the stock transaction tax and the 12% value-added tax as the only tax impositions on trading at the local bourse.

Stocks have enjoyed the stamp tax exemption for the past five years, but the privilege is expiring in March.