Housing woes feared sans VAT exemption

Senators on Wednesday urged the Department of Finance (DOF) to rethink the lifting of the value-added tax (VAT) exemptions on low-cost housing as this may prevent low-wage earners from owning homes and further exacerbate the country’s housing backlog.

Sen. Sonny Angara, chair of the Senate committee on ways and means, expressed apprehensions on the DOF proposal, saying this would largely affect the capacity of middle-class and poor Filipinos from having their own homes.

“The (housing) situation is already bad and if we impose tax on owning a house, it will get worse… more Filipinos will be homeless,” Angara told reporters, saying that the proposed measure will “surely pass through the eye of the needle.”

His committee deliberated on Wednesday on the value-added tax provisions of the Tax Reform Acceleration and Inclusion Bill that was recently passed by the House of Representatives.

Under the measure, the DOF proposed removing VAT exemptions on the sale of socialized housing but only upon the establishment of a housing voucher system and the sale of low-cost housing, of residential lots valued at P1.9 million and of house and other residential properties valued at P3 million.

The DOF also recommended lifting VAT exemptions on the lease of residential units with monthly rental of up to P12,800.

The government is expected to generate P6.2 billion from the expansion of the VAT base by 2018, it noted.

At the hearing, Sen. Cynthia Villar said the DOF proposal to remove tax incentives on the purchase of real estate properties worth at least P3 million was tantamount to penalizing minimum-wage earners, particularly overseas Filipino workers (OFWs), the country’s biggest market for housing investments.

“Based on surveys, these OFWs go abroad to be able to buy a home for their family and a P3-million house is what they can usually afford. And then you are removing the VAT exemptions. Isn’t it you are penalizing the OFWs?” said Villar, whose family is invested in the real estate business.

Villar also asked the DOF if it was worth discouraging OFWs from investing in their own homes only so that the government could generate more money that it could not spend accordingly.

Sen. Joseph Victor Ejercito also asked the agency to reconsider its proposal as this might discourage housing production and eventually aggravate the country’s housing backlog, which was expected to reach 5.7 million units by 2022 based on government data.

“We may have a P6.2-billion revenue impact but the effect to the marginalized earners who dream of having their own homes and our problem of addressing the housing backlog I hope can be considered,” said Ejercito.

Finance Undersecretary Antoinette Tionko said the agency will consider the points raised by the senators.