THE DEPARTMENT OF FINANCE (DOF) remains against providing permanent tax exemption on the trading of shares in the stock exchange and of the Pag-Ibig Fund.

According to the DOF?s latest update on priority bills pending in Malacañang and in Congress, tax exemptions on stock trading and the government?s housing agency may weaken the economy rather than help stimulate growth.

Submitted for signing by President Macapagal-Arroyo is the bill exempting from the documentary stamp tax (DST) the sale, barter and exchange of shares of stocks listed and traded through the stock exchange.

This bill is meant to make permanent the temporary DST exemption on stock trading that expired last March as provided under Republic Act No. 9243 or the so-called DST Law of 2004.

RA 9243 ?rationalized? the DST structure and mandated a five-year suspension of this levy on stock transactions.

However, the DOF only wanted another five-year suspension of the DST on the trading of shares of stocks.

The ?DOF is amenable to grant up to five years of DST extension?in consideration of the present financial crisis and the economic recession being felt by the world?s economies,? the department said.

Citing data from the Philippine Stock Exchange and the Bangko Sentral ng Pilipinas regarding trading from 2004 to 2007, the DOF said the government would lose P1.4 billion in revenues yearly if the President signed the bill into law.

Similarly, waiting for the green light is a bill that seeks to further strengthen the Home Development Mutual Fund or Pag-Ibig Fund.

This bill proposes to exempt the fund and all its assets, contributions, investments and income from all forms of taxes, assessment fees, custom or import duty and other charges.

Also, the bills want payments made by the Pag-Ibig Fund exempt from such liabilities before or after the payments are made, except to pay any debt of the recipient member.

The DOF said that instead of an outright tax exemption, ?which can adversely impact the government?s much-needed,? the tax subsidy that Pag-Ibig currently enjoys should be maintained.

?Granting more tax exemption privileges will create distortions in resource allocation, unwarranted abuses and leakages and severe revenue erosion on the part of the government,? DOF said.

?It will also result in inconsistency in the tax treatment of GOCCs (government-owned and -controlled corporations),? it added.

The DOF estimates that if the Pag-Ibig bill were made a law, it would cost the government P1 billion in revenues yearly.

Both chambers of Congress ratified the DST bill last June 1, and the Pag-Ibig bill on May 26, but copies have yet to be submitted to the President, DOF records show.