CREBA appeals plans to scrap VAT-Exemption for Housing

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The country’s largest umbrella association of real estate developers made an urgent appeal to Congress and the President’s economic managers to reconsider plans to remove the value-added tax exemption currently being given to socialized and economic housing as such would escalate the prices of housing units beyond the affordability level of the millions of homeless.

In a recent briefing organized by the Chamber of Real Estate & Builders’ Associations, Inc. (CREBA) attended by major industry stakeholders including former Congressman Amado S. Bagatsing, the group made a thorough review of House Bill No. 4688 filed by Cong. Joey Salceda which envisions comprehensive “tax reforms for acceleration and inclusion.”

According to Charlie A. V. Gorayeb, CREBA national president, government figures show that the majority of housing loan availments via PagIBIG Fund for the last decade remains somewhere at the P800,000 level.

“Without VAT-exemption, buyers of this type of housing units would have to bear at least P96,000 additional cost, effectively putting low-income earners at risk of not being able to afford their monthly amortizations,” Gorayeb said.

“This will gravely  affect government efforts to address the perennial and ever-increasing housing backlog which the Housing and Urban Development Coordinating Council (HUDCC) has announced to have reached 5.7 million units as of 2016,” he explained further.

At present, the Bureau of Internal Revenue grants VAT-exemptions to all house and lot packages up to P3,199,200 per unit.

The group’s national chairman Noel Toti M. Cariño underscored that the proposed move will be a big disincentive to socialized and economic housing beneficiaries as the VAT will be for the account of the homebuyers and not the real estate developers. He said that even at present, housing has been one of the most, if not the most “heavily-taxed, highly-regulated” of industries.

“The country’s economy will benefit more from a vibrant housing industry considering its pump-priming economic effects, as well as its labor and capital-intensive nature,” Gorayeb and Cariño concluded.

Among CREBA’s members are property developers, builders, contractors, suppliers and manufacturers of construction materials, real estate service practitioners and other stakeholders engaged in more than 68 allied fields.

Towards its vision of “A Home for Every Filipino”, CREBA’s aspirations for the homeless sector are embodied in its “FIVE-POINT AGENDA FOR HOUSING”, a package of policy and legislative reform proposals that aim to address issues on finance, land and governance to enable joint public-private efforts to produce at least 500,000 housing units per year and address homelessness within a period of 20 years. ###