Keep socialized and economic housing VAT-exempt

The Chamber of Real Estate & Builders’ Associations, Inc. (CREBA) has made an urgent appeal to Senators to retain the value-added tax exemption currently being given to socialized and economic housing amidst the imminent passage of the Tax Reform for Acceleration and Inclusion (TRAIN) bill.

Imposing VAT would surely raise the prices of housing units beyond the reach of millions of homeless poor, aggravating further the ever-increasing housing backlog estimated by the Housing and Urban Development Coordinating Council to be at least 5.7 million units as of last year.

While the bill intends to raise more money to fund government services and projects, housing must be spared from any new burden as it will always remain to be – along with food and clothing – a basic human need.

Housing must be government’s priority agenda to ensure a dignified quality of life for its citizens. The R 6.2 billion taxes that the Department of Finance intends to collect by taxing socialized and economic housing is too small compared to an economic slowdown that may result when Filipinos, including the 15 million who work overseas, can no longer afford to buy homes at all.

In 2011, the Bureau of Internal Revenue raised the threshold of VAT-exempt transactions for sales of house and lot packages up to R3,199,200 per unit and residential lots valued at R1,919,500.

The adjustment was based on price hikes on construction materials including cement and steel and the rise in consumer price index, particularly for housing between 2004 up to 2010 as observed by the National Statistics Office and Bangko Sentral.

The supposed beneficiaries stand to lose all chances of owning a home under the proposed measure. The net effect of the VAT does not stop at 12 percent because purchases for these housing segments are made via loans lasting as long as 30 years.

Even at present, housing is among, if not the most “heavilytaxed, highly-regulated” of industries, a stark contrast against its globally-recognized pump-priming economic potentials.

We hope that the legislature will heed the industry’s call to keep the current VAT-exemption given to housing to allow it to flourish and create more benefits for the people and the national economy.