This paper assessed the revenue performance of the Stock Transaction Tax (STT) pursuant to Republic Act (RA) No. 10963, also known as the “Tax Reform for Acceleration and Inclusion (TRAIN)” Law, which took effect on 01 January 2018. The TRAIN Law increased the STT rate from 0.50% to 0.60% of the gross selling price or gross value in money of the shares of stock sold, bartered, exchanged, or otherwise disposed of through the local stock exchange which the seller or transferor shall pay.
The increase in the STT rate successfully achieved its objective of generating additional revenue for the government to compensate for the revenue loss from lowering the individual income tax and finance the government’s priority social and infrastructure programs. During the initial year of implementation of RA 10963 in 2018, the STT collection increased to P9.74 billion or by 9.40%, from P8.90 billion in 2017 and continued to grow to P10.10 billion or by 3.60% in 2019. It was also reported that the TRAIN law’s incremental revenues from the STT amounted to P900 million in 2019.
It is noted, however, that Package 4 of the Comprehensive Tax Reform Program proposes to gradually reduce the current 0.60% STT rate to put the Philippines at par with its neighboring countries, and increase market participation which will lead to a higher volume of stock transactions, hence, widening the tax base and raising more revenues for the government.