Section 4
SEC. 4. A new section is hereby inserted between Sections one hundred and ninety-five-A and one hundred ninety-six of the National Internal Revenue Code, to be know as Section one hundred and ninety-five-B, which shall read as follows: "SEC. 195-B. Percentage tax on stock transactions.-There shall be levied, assessed, collected, and paid on every sale, exchange, transfer or similar transaction intended to convey ownership of, or title to, any share or shares of stock, a tax equivalent to two per centum of the gross selling price of the share or shares of stock sold, or of the gross value in money of the share or shares of stock, exchanged or transferred, which shall be paid by the seller or transferor. "The tax herein imposed shall not apply to: "(1) The issuance by a corporation of shares of stock, whether original or additional issues; "(2) The donation of any share or shares of stock made to any educational or charitable corporation, institution, foundation, trust or philanthropic organization or research institution or organization as denned in and subject to the conditions imposed by Section one hundred ten of this Code; "(3) The exchange of any share or shares of stock effected pursuant to the plan for merger or consolidation under paragraph (2), (b), Section thirty-five of this Code; "(4) The transfer of shares of stock by testate or intestate succession; and "(5) The sale, exchange or transfer of shares acquired before the effectivity of this Act, in which case the pertinent provisions of this Code shall apply. "For a period of five years from the effectivity of this Act, any capital gain arising from a stock transaction on which the tax herein imposed has been paid shall not be into account in computing net capital gain or loss under Section thirty-four of this Code if (1) both the acquisition and the disposition of said stock by the taxpayer are effected after the effectivity of this Act and (2) the sale, exchange, and transfer is bona fide and the consideration for the transaction represents the substantial fair market value of the stock: Provided, That, in of gain not arising from, but realized out of the said stock transaction, the pertinent provisions of this Code shall apply. However, any capital loss arising from such transaction shall be taken into account in computing net capital gain in accordance with the provisions of this Code; Provided, That there shall be no capital loss carry-over. "Notwithstanding the provisions of Section thirty of this Code, the tax imposed in this section shall not be an allowable deduction for income tax purposes. "For purposes of this section, "fair market value" of shares of stock subject of any transaction in a stock exchange on any particular date will be determined by the actual selling price of the stock as certified by the stock exchange which handled the transaction. In the case of shares of stock not traded through a stock exchange but listed in one or more stock exchanges the highest closing price of the day on which the shares are transferred shall the fair market value of the shares. In the absence of any sale, the highest closing price of the day nearest to that day on which the shares are transferred shall be the r market value of the shares. In all other cases, the fair market value shall be determined by considering the nature and history of the business, book value of the stock, earning and dividend paying capacity of the company, goodwill, and sales of both the stock to be valued and that of companies similarly situated. "No sale, exchange, transfer, or similar transaction intended to convey ownership of, or title to, any share or shares of stock which had been acquired after the date of effectivity of this Act, shall be registered in the books of a corporation, unless the receipt of a corporation, unless the receipt of payment of the tax imposed under this section or a copy thereof, is filed with and recorded by the stock transfer agent or secretary the corporation. "In the case of stocks traded through a stock exchange it shall be the duty of the stock broker to collect on behalf of the government the tax due from the seller o transferor upon the issuance of the confirmation of sale. The stock broker shall issue the confirmation of sale for the account of any transferor or seller of stocks simultaneously upon payment of the tax herein imposed and not otherwise. "In the case of stocks not traded through a stock exchange, it shall be the duty of the stock transfer agent or the secretary of the corporation, in case a corporation has no stock transfer agent, to collect on behalf of the government the tax due from the seller or transferor before recording the transfer of stock in the stock and transfer book. "The stock broker, transfer agent, or secretary of the corporation shall issue the corresponding official receipt, which was previously registered with the Bureau of Internal Revenue to the seller or transferor. "It shall be the duty of every stock broker to turn over the sums collected by him as tax to the Bureau of Internal Revenue within three banking days from the date of collection thereof; and to submit on Monday of each week to the secretary of the stock exchange of which he is member, a true and complete return, which shall contain a declaration that he made it under the penalties of perjury, of all transactions effected through him during the preceding week and of the taxes collected by him and turned over to the Bureau of Internal Revenue. The secretary of the stock exchange shall reconcile the same with the weekly reports of stock brokers and in turn transmit the Bureau of Internal Revenue on the first and sixteenth day of each month a consolidated return of all transactions effected during the preceding period through the exchange. "It shall likewise be the duty of every stock transfer S r secretary of the corporation, as the case may be, over the sums collected by him as taxes under this section to the Bureau of Internal Revenue within three banking days from the date of collection thereof and to file with the Bureau of Internal Revenue on Monday of each week a true and complete return, which shall contain a declaration that he made it under the penalties of perjury of all taxable transactions effected through him during the preceding week and of all taxes collected by him and turned over to the Bureau of Internal Revenue."