To help millions of overseas Filipino workers (OFWs) and low-income earners who have yet to completely own a home, housing purchases should be spared from the looming value-added tax (VAT) imposition come 2021 so that they can still fulfill it within their means, according to the Chamber of Real Estate & Builders’ Associations Inc. (Creba).
The largest group of Philippine real estate and housing developers has made this appeal to Congress, saying that the impending imposition of new taxes will hurt combined government and private-sector initiatives to address the housing backlog of around 6.57 million, not to mention new dwelling requirement of 300,000 units piling up annually.
Passed in December 2017, Republic Act 10693, or the Tax Reform for Acceleration and Inclusion (TRAIN law) recognized the demand of the housing sector by extending for another three years the effectivity of VAT-exemption thresholds of up to P1.9 million for lots only and P3.2 million for houses and lots last adjusted in 2011 in view of prevailing economic conditions and latest consumer price index. The cap slides down to as low as P2 million by January 2021.
Per Creba National Chairman Charlie A. V. Gorayeb, prices of low-cost housing will go up beyond affordability levels, thus further marginalizing the homeless poor even if it is a main government role to provide housing for its citizens as a constitutional social right for it is a basic human need.
“VAT is a buyer’s tax which real-estate developers have no choice but to fully pass-on to homebuyers. And because a once-in-a-lifetime housing purchase at the range of P3.2 million and below is usually availed of under long-term loan, the VAT burden is not a one-time impact,” he said.
Gorayeb cited, for instance, that the 12-percent VAT of P360,000 per unit for a housing unit sold at P3 million actually translates to P1 million over a 30-year mortgage life.
Creba National President Noel Toti M. Cariño underscored that since housing is globally recognized for its economic multiplier effects, VAT imposition will negate its benefits and will only stifle the industry’s growth.
“Whatever estimated collection from the additional VAT on housing is not realizable as we expect a massive industry slowdown when buyers can no longer afford to buy and developers can no longer afford to build for lack of qualified takers,” he stressed.
Believing that the already heavily taxed and highly regulated housing industry must be spared from any new taxes, the two Creba officers asked lawmakers to preserve the status quo on VATable housing packages to give the millions of yet homeless citizens of the country an equal chance to a dignified quality of life through decent and affordable housing.
Image credits: P.A. properties