Tax reform to boost stock market – PSE chief

MANILA, Philippines -  The passage of the first package of the Comprehensive Tax Reform Program this year is expected to provide a significant boost to the local stock market, which has been trekking between the 7,700 to 7,900 levels this month, the Philippine Stock Exchange Inc. (PSE)’s new chief said.

PSE president and chief executive officer Ramon Monzon in an interview Friday night said he is supporting the immediate passage of the tax reform program being pushed by the Department of Finance as it would give the country’s stock market a big lift.

“I think if the tax reform package is passed, more or less with as much substance as with what is being proposed, not a diluted one, I think that will be a big propellant for the market. So we’re very hopeful that this tax reform package will pass because that will be a very big impetus to the stock market going up,” Monzon said.

“If you’ll notice it, the market appreciated. It went up in the last two  weeks and really the trigger point for that is when the tax reform package was passed at the (House) Ways and Means Committee. The reaction was a big jump right away because the foreign investors regained their trust that this could indeed pass,” he added.

The Duterte administration’s tax reform proposal is outlined in House Bill 4774, which seeks to lower personal income tax rates while providing revenue enhancing measures, which among others, aim to reform the excise tax system for fuel and automobiles and broaden the VAT base, while retaining exemptions for seniors and persons with disabilities.

The House Committee on Ways and Means gave its final approval to the bill last May 15, making it ready to be taken up in the House plenary.

According to Monzon, the tax reform program’s goal of generating more money for government infrastructure projects and increasing disposable income of people would pave the way for the stock market to perform better.

“What will happen is if the tax reform package is passed, then the government will have resources for financing for infrastructure. They engaged in these infra projects, so naturally there will be new jobs, if you create jobs you create and increase in disposable income. It’s a holistic one,” he said.

“If you’ll remember, one of the most popular laws ever passed in the Philippines is the VAT law. But if we didn’t have that law in place when the crisis hit in 2008 to 2009, we will be like the other countries. But we were so insulated and it seemed as if we were not hit. Our banks were very strong.  Why? Because our macroecnomic picture is very good, it was very positive. So the same way, this will do the same thing if you’ll able to pass this,” Monzon added.

Monzon was elected during the PSE’s annual stockholders’ meeting early this month and takes over the position of former president Hans Sicat, who ended his six-year tenure to give way to his new task as chief integration officer who will consolidate the PSE and the Philippine Dealing and Exchange Corp.