HOUSE Deputy Majority Leader and Bagong Henerasyon (BH) party-list Rep. Bernadette Herrera has urged the Department of Finance (DOF) to consider suspending the looming imposition of 12-percent value-added tax (VAT) on low-cost housing while the country is still reeling from economic toll caused by the coronavirus disease-19 (COVID-19) pandemic.
It will be recalled that low-cost housing has been given a three-year reprieve from VAT payment under Republic Act (RA) No. 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN) law. The reprieve is set to end by December 31 this year.
Herrera, who represents the party-list group Bagong Henerasyon in Congress, said she fully supports the appeal of the Chamber of Real Estate & Builders’ Associations Inc. (CREBA) to suspend VAT on low-cost housing, which will take effect on January 1, 2021 under the TRAIN law.
“We are hoping that the DOF, led by Secretary Sonny Domiguez, 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 said.
“The suspension will also provide the country’s real estate and housing industry the much-needed economic stimulus to fully and immediately recover from the effects of the pandemic,” she added.
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 payment of 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.
“Many Filipinos who were forced to defer plans to buy homes due to the pandemic would suffer the brunt of the VAT on low-cost housing,” Herrera said.
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,” she pointed out.
The party-list lawmaker said that a home has never been more important in this time of COVID-19.
“With COVID-19, making homes in decent and safe communities is not only necessary but a matter of survival,” she said.
Herrera lamented that buyers of low-cost housing units would ultimately bear the burden of VAT.
“Unfortunately, real estate developers have no choice but to fully pass on VAT to homebuyers. That added cost unfairly burdens people who obtain their low-cost housing units through a long-term loan,” Herrera said.
According to CREBA, the 12 percent VAT of about P360,000 for a P3.2 million home actually translates to P1 million over a 30-year mortgage life.
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.
This situation, Herrera warned, would further increase the country’s housing backlog.
She noted that the Philippines is already struggling from a 6.57 million housing shortfall that grows by at least 300,000 more units each year.Publication Source : People's Tonight