A leader of the House of Representatives has called for a drastic cut in the taxes imposed on construction materials.
1-PACMAN Party-ist Rep. Michael Romero said Malacañang should seek ways to prevent an increase in house rental rates that will surely happen if the cost of building houses increases.
Under the Tax Reform for Acceleration and Inclusion Law, the tax imposed on construction materials increased. In addition, the TRAIN Law imposed higher taxes on other materials and services related to construction.
Construction experts said that the implementation of the TRAIN Law starting this year has resulted in an increase in the cost of building houses by as much as 30 percent.
“It is clear from the data of the Bangko Sentral ng Pilipinas that housing rentals have increased and this has contributed to the rise in inflation over these past months,” Romero, a House assistant majority leader, said.
Citing the latest inflation data for September, Romero said housing rentals accounted for 0.40 percentage points of the total 6.7 percent inflation that month.
He said Malacañang should jointly task the Bureau of Internal Revenue and the Housing and Urban Development Coordinating Council to ensure that landlords and other lessors are not abusing or finding reasons to charge their tenants more to make up for the VAT imposed by the TRAIN Law, as well as pile on additional charges to inflate rent.
“Only those lessors who are VAT-registered should legally claim VAT. Non-VAT-registered lessors should not use the TRAIN Law as their excuse for raising rent because they are not paying VAT and therefore not paying the right tax on that,” Romero said.
The TRAIN Law (RA 10963) provides that only residential units with monthly rentals not exceeding P15,000 are exempted from VAT.
“It so happens that current HUDCC rent control applies only to units ranging from P100 to P10,000.00. Lower middle income households whose monthly rent exceeds P10,000 are therefore at the mercy of lessors and landlords. It is the moral duty of government to protect them from abuse,” Romero said.
Romero added that one way to protect tenants is for the HUDCC to deputize the mayors, governors, and other key LGU officials.
“HUDCC and DILG can formulate implementing rules and regulations on the deputization and details on how LGUs can prevent, detect and take action against abusive lessors and landlords,” Romero said.