Creba presses for extension of current VAT-exemption thresholds for housing
The Chamber of Real Estate & Builders’ Associations Inc. (Creba) urged lawmakers to extend the current exemption of low-cost housing from value-added taxes to give more Filipinos a chance to own decent, affordable homes.
In separate letters sent to senators and congressmen, the country’s largest association of real estate and housing stakeholders underscored the urgent need to “extend the effectivity of the current VAT-exemption thresholds for housing under Republic Act No. 10693 or the Tax Reform for Acceleration and Inclusion (TRAIN Law) which are due to expire by December 2020.”
“We fear the impending imposition of new taxes will heavily impact on combined government and private sector efforts to address the estimated 6.57 million homeless Filipino families nationwide as of date, not to mention the new housing need of 300,000 units which adds up every year,” said Creba, which is led by its national chairman, Charlie A.V. Gorayeb and its national president, Noel “Toti” M. Cariño.
Under the TRAIN Law, the sale of a residential lot valued at P1.919 million and below, and of a house-and-lot and other residential dwellings valued worth P3.199 million and below, are exempt from the 12 percent VAT. But this is valid until end December 2020. Starting January 2021, the cap will be reduced to P2 million. This means that only lots, or house-and-lot units worth P2 million and below will be exempt from VAT.
“We are of the strong opinion that should this take effect, what are supposed to be low-cost housing prices will rise beyond affordability levels and will only further marginalize the homeless poor, including the overseas Filipino workers, who have yet to fulfill their life-long dreams of having a home they can call their own,” the group added.
Creba further stressed that the imposition VAT on low cost housing will only deprive millions of Filipinos from a basic right that is housing as it will make it harder for them to afford quality, decent homes. For example, a 12-percent VAT slapped on a low-cost housing unit sold for P3 million will translate to an additional cost of P1 million for the buyer, who will have to fully shoulder this burden.
For Creba, this provision of lowering the cap to P2 million under the TRAIN Law will only cut off whatever remaining chance of millions of Filipino homebuyers to participate in the housing value chain, which has a huge multiplier effect on the economy. It will likewise suppress the unprecedented growth that the housing sector is experiencing today, all in exchange for a perceived collection of P6.2 billion taxes, as based on the estimates by the Department of Finance (DOF).
“We appeal to you to intervene on the imposition of VAT (on) housing purchases above P2 million per unit effective January 2021 to provide millions of yet homeless citizens of the country the chance to a dignified quality of life through decent and affordable housing,” it said.
“There is greater benefit from the boost in taxes that can be generated by heightened activity in real estate and housing which are likewise good for creation of jobs and filling up the fiscal coffers. While there is still much to be desired in infrastructure, public transportation and enforcement of anti-corrupt practices in government, we earnestly ask you to shield this already heavily-taxed and highly-regulated housing industry from any new taxes,” the group further stressed.