The Capital Markets Efficiency Promotion Act (CMEPA), signed May 2025, standardizes several capital-markets tax rates in the Philippines: a uniform 20% final tax on interest income (ending the old exemption for 5-year time deposits), a cut in stock transaction tax from 0.6% to 0.1%, and a lower documentary stamp tax on new share issuances. Jay Ballesteros and Karenza Gonzales of SGV & Co. call this simplification, and on its face it is — one rate replaces several carve-outs. But a flat rate applied to an unequal population doesn't produce an equal outcome. The BSP reports only 25% of Philippine households have any savings at all, and in a 2021 financial literacy survey only 2% of Filipinos could correctly answer all six basic financial-literacy questions. A uniform 20% tax on interest income is neutral in its wording but regressive in its incidence: it falls hardest, proportionally, on small savers for whom every peso of interest matters, while high-income earners who already hold diversified stock and bond portfolios capture most of the benefit from lower transaction costs. The general lesson: "simplification" and "fairness" are not the same axis. A rule can be procedurally neutral — one rate, applied identically to everyone — while remaining substantively regressive, because the population it applies to isn't starting from equal footing. Evaluating a flat-rate reform requires checking the distribution of who's actually positioned to use it, not just the elegance of the rate structure itself. ## Source - [[20260805 CMEPA - Catalyzing Inclusive Growth Through Smarter Investment Taxation]] — BusinessWorld, August 17, 2025 — https://www.bworldonline.com/economy/2025/08/17/692139/cmepa-catalyzing-inclusive-growth-through-smarter-investment-taxation/