A leader of the House of Representatives has urged the Department of Finance (DOF) to consider suspending the looming imposition of 12-percent value-added tax (VAT) on low-cost housing amid a national health crisis.
House Deputy Majority Leader Bernadette Herrera said in a statement she fully supports the appeal of the Chamber of Real Estate & Builders’ Associations Inc. (Creba) to suspend the VAT on low-cost housing. The VAT takes effect on January 1, 2021, as mandated by Republic Act (RA) 10963, or the Tax Reform for Acceleration and Inclusion (Train) law, after giving a 3-year reprieve; set to end by December 31.
“We are hoping that the DOF will find a way to help low-cost housing developers and buyers by directing the Bureau of Internal Revenue to suspend the VAT on the sector until this public health crisis is over,” Herrera was quoted in the statement as saying.
Based on the 2011 consumer price index, the Train law exempted buyers of residential lots worth up to P1.9 million and house and lot units up to P3.2 million from paying a VAT. By January next year, only those worth P2 million and below would be VAT-exempt.
Herrera warned that the imposition of VAT on low-cost housing would make it more difficult for lower middle-income Filipinos to achieve their dream of buying their own home.
She said no less than the Constitution recognizes housing as a basic human right.
“The right to adequate housing ensures that people enjoy physical and mental health and live in a safe place in peace and dignity,” Herrera said.
She added that buyers of low-cost housing units would ultimately bear the burden of VAT.
According to the Creba, the VAT of about P360,000 for a P3.2-million home actually translates to P1 million over a 30-year mortgage life.
The Creba said the resulting surge in housing prices beyond the affordability of the targeted beneficiaries, including overseas Filipino workers, due to VAT imposition will cause a massive housing industry slowdown.
Herrera said the Philippines is already struggling from a 6.57 million housing shortfall that grows by at least 300,000 more units each year.