DoF to seek lower DST, warns TIEZA could lose travel tax

FINANCE Secretary Carlos G. Dominguez III said Thursday he will seek to lower the documentary stamp tax (DST) to restore the Department of Finance’s original program when it proposed legislation that later became the Tax Reform for Acceleration and Inclusion Act (TRAIN).

Mr. Dominguez told members of the Rotary Club Manila during their meeting yesterday that the increase in DST was not part of the Finance Department’s proposals when it was lobbying for TRAIN, which took effect in 2018.

“The increase in the DST was not part of the tax reform program. It was inserted during the bicam (bicameral conference). During the time when you have a bicam the (Department of Finance) is not allowed to speak so that was inserted and unfortunately we were unable to register our objection on that. We definitely don’t agree with it and hope that in some future legislation the DST will be reduced,” he said.

He was responding to an issue raised by a participant at the meeting about higher DST slowing down business growth and raising the costs of doing businesses.

Mr. Dominuez said the DoF will “attempt to reduce it in the future” but since the “process for legislation is long and tedious,” he said “I can’t promise it now.”

Republic Act No. 10963 or the TRAIN Act, which came into force on Jan. 1, 2018, doubled the DST to P3 from P1 previously on documents, instruments, loan agreements and papers.

DST rates on debt instruments were hiked by 50% while the rates on property insurance, fidelity bonds and other insurance, indemnity bonds and deeds of sale, conveyance and donation of real property remained unchanged.

Collections from DST increased last year to P4.7 billion on the back of “higher transaction value and better collection efficiency,” the DoF reported earlier.

ELIMINATION OF TRAVEL TAX

Also during the same open forum, Mr. Dominguez said his department will look into the possibility of eliminating the travel tax, warning the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) to use up its funds and act faster in implementing programs “or the travel tax will be eliminated.”

“The travel tax is in place and definitely we will look at its elimination... In fact I had a meeting with the TIEZA people recently and I noted that they have P14 billion in their account. And I told them if they don’t spend it, I will take it away,” he said after a member of the Rotary Club raised the issue.

According to TIEZA’s website, full travel tax rates for economy and business class flights are at P1,620 currently while first class flights are taxed P2,700.

TIEZA receives half of the total revenue collected from travel tax while the Commission on Higher Education receives 40% and 10% goes to the National Commission for Culture and Arts.

TIEZA approved a total of P5 billion worth of infrastructure projects in December.