The Department of Finance (DOF) said exempting socialized housing from the value-added tax (VAT) should generate additional revenues worth an estimated P6.2 billion.
According to Finance Undersecretary Antonette C. Tionko, the first package of the proposed Comprehensive Tax Reform Program lifting the VAT exemption on socialized housing will only be lifted once the government has implemented a socialized housing voucher system scheme.
“The proposal is to work with housing agencies. [Revenues raised are expected to reach] P6.2 billion,” Tionko told the Senate Committee on Ways and Means at a recent hearing.
The housing backlog has reached 5.7 million units at the moment. The government needs to build at least an estimated 2,600 homes each day over the next six years to meet the need for housing.
According to Vice President Maria Leonor G. Robredo, who is also chairman at the Housing and Urban Development Coordinating Council (HUDCC), the number of slum areas increases by an average of 3.4 percent each year and, yet, the government budget for socialized housing remains among one of the lowest in Southeast Asia. In the last six years, only 1.135 percent of the nation’s budget, or P23 billion a year, was allotted for the government
housing program.
Earlier the European Chamber of Commerce of the Philippines also said continued population growth paired with low incomes and the high cost of buying a house, among others, are challenges preventing government and private companies from addressing effectively the issue of housing backlog.
A section of House Bill (HB) 5636 provided that “the sale of real property utilized for socialized housing, shall no longer be an exempt transaction upon the establishment of a housing voucher system which shall benefit buyers of socialized housing,” according to the proposal.
Under HB 5636, the incremental revenues generated from VAT on the sale of real property utilized for social housing, will be allocated as subsidy through a voucher system for qualified beneficiaries under the government’s shelter programs.
According to the DOF, implementing the housing voucher system is a joint concern of the Department of Budget and Management and the HUDCC.
