Senate retains VAT exemption for low-cost housing

The Senate has retained the value-added tax exemption currently enjoyed by socialized and economic housing projects.

The Senate version of the first package of the tax reform bill or the Tax Reform for Acceleration and Inclusion (TRAIN) retained the VAT exemption of all socialized housing both in and outside Metro Manila that are worth P2 million and below.

“Ayaw na po nating palalain pa itong napakalaking housing backlog ng bansa. That’s why the Senate opted to keep the VAT exemption so as not to exacerbate the housing problem of the country,” Senator Sonny Angara, chairman of the Senate ways and means committee and sponsor of the TRAIN bill, said in a statement on Friday.

The original proposal of the Department of Finance (DOF) sought to remove the VAT exemption of both socialized housing, which is priced at P450,000 and below, and of low-cost housing as part of its move to expand the VAT base.

Apart from Angara, Senators JV Ejercito and Cynthia Villar have also pushed for the retention of the exemption.

Citing data from the Housing and Urban Development Coordinating Council (HUDCC), Angara said the total housing need of the country has reached 6.58 million from 2017 to 2022.

He added that the P2-million price ceiling for mass housing projects is in line with the policy direction of the Duterte administration to disperse economic growth and opportunities to areas outside of Metro Manila.

Data from HUDCC showed that majority or 5.91 million of the total 6.58 million housing need of the country are in areas outside Metro Manila.

Angara also cited data from the Housing Industry Roadmap of the Philippines 2012-2030, which showed that 60 percent of the housing backlog is in the economic housing segment with a price range of above P450,000 to P1.7 million.

“Pinanatili natin ang VAT exemption para hindi na magtaas ng presyo ang mga economic housing na karamihan sa mga bumibili ay low-income earners at OFWs. Dapat protektahan natin ang kapakanan nila sa halip na pahirapan pa sila,” he said.

The Senate version also retained the VAT exemption of senior citizens, persons with disabilities, and cooperatives, as well as of raw food and agricultural products, health and education.

The proposed first package of the tax reform measure aims to lower income taxes while limiting value-added tax exemptions, adjusting excise taxes on oil and automobiles, and imposing new taxes on sugar-sweetened beverages.

The Senate is scheduled to resume deliberations on the first package of the tax reform bill on Monday, November 27. —John Ted Cordero/KBK, GMA News