Friday, February 13, 2009

Removal of documentary stamp tax on OFW remittances pushed

We ought to support this move.

02/12/2009 09:02 PM

MANILA, Philippines — Militant lawmakers on Thursday pushed for the removal of the documentary stamp tax (DST) on all monetary remittances from Filipinos abroad to their families in the Philippines.

A bill filed by representatives of party-list groups Gabriela, Bayan Muna and Anakpawis sought to scrap the tax amid complaints by OFWs that the DST on their remittances was an added financial burden. The tax is estimated to reach US$1.5 million or P70.5 million per month.

House Bill 5862 proposes the removal of the documentary stamp tax on all remittances from Filipinos abroad by repealing Section 181 of Republic Act 8424 or the "Tax Reform Act of 1997."

The authors of the bill are Gabriela Reps. Luzviminda Ilagan and Liza Maza, Bayan Muna Reps. Satur Ocampo and Teodoro Casiño and Anakpawis Rep. Rafael Mariano.

They stressed that the removal of the tax would “serve as proof of the State's high regard for the huge sacrifices of all Filipino migrants and ensure that their hard-earned monies fully go to their families, putting their interests and welfare over and above revenue generation and other interests of private businesses and even of the government."

At present, the government charges a DST of 0.15 percent for every US$200 remittance. Banks have been collecting this since the enactment of RA 8424 and money transfer organizations are now following suit, said the lawmakers.

Considering that OFW remittances average US$1 billion monthly, this DST collection would mean US$1.5 million or P70.5 million at $1:P47 exchange rate monthly in DST revenue of the government, the lawmakers said.

In contrast to the huge profits and other benefits enjoyed by banks, money transfer operators and the government from OFW remittances, OFWs and their families continue to tighten their belts to make do with the average monthly remittance of US$340 or P15,980 at $1:P47 exchange rate, they said.

Citing data from the National Statistics Office Survey of OFWs, the lawmakers noted that since 1995, around 71 percent of workers' remittances have been sent home as cash, of which 70 percent passed through the banks.

The share of cash remittances coursed through the banks has been increasing from 65 percent in 1995 to 76 percent in 2002.

The Bangko Sentral ng Pilipinas estimates that banks now capture 90 percent of total remittances, up from 80 percent several years ago. Total remittances in 2007 were estimated to have reached $15 billion, seven percent more than in 2006.

In a press statement, the lawmakers acknowledged that the pricing for remittance services among banks was quite competitive.

In the US, where most Filipino remittances come from or are channeled through, service charges for remittances range from US$7 to US$8 for credit to account transactions; US$10 to US$12 for credit other bank service; US$8 to US$12 for advice and pay services (within Metro Manila); and US$12 to US$15 for door-to-door services (within Metro Manila).

Philippine bank charges range from $5 (book transfer within one bank, foreign accounts to local branch account) to $16 on the high-end, which can include door-to-door courier delivery. Door-to-door operations add an increment cost of at least $2 to remittance price. - D'Jay Lazaro, GMANews.TV


1 comment:

ReadMe said...

I don't see anything good in removing the documentary stamp tax or DST on OFW remittances (if any). Gabriela, Anak Pawis and those who filed this bill to abolish DST did not do its homework.

Note that DST has been there and used by our govt as one of the sources of its revenue; that DST is charged proportionately to the amount remitted. I don't believe it is acceptable to merely depend on the complaint by the OFWs that DST is an added financial burden (to the OFWs)to file such bill. The article is bereft of any good reason why the bill should be filed.