Action for Economic Reforms (AER) lauds Senator Risa Hontiveros’ proposed amendment to the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Bill. Her proposal favors the continuation of the value added tax (VAT) on housing, and earmarks incremental revenues for a Department of Human Settlements and Urban Development (DHSUD) program of direct subsidies for poor families.

During yesterday’s Senate plenary for amendments to the CREATE Bill, Senator Hontiveros proposed to retain a provision that Senator Ralph Recto previously removed. Recto’s removal of such provision aimed to permanently exempt the housing sector from VAT. By retaining the provision, Senator Hontiveros maintained the current rules on VAT exemption for housing. She also proposed adding a provision that earmarks the incremental revenues from VAT on housing for a DHSUD program of direct subsidies for families unable to afford adequate housing.

This is a welcome amendment which not only prevents the foregone revenues and inefficiency Senator Recto’s permanent VAT exemption would have entailed, but also develops the housing sector in a more effective, transparent, and direct manner. Direct subsidies have a bigger impact on the poor, as compared to VAT exemptions which only benefit the upper class who have the funds to build houses.

We call on the Senate to accept Senator Hontiveros’ amendment which provides fiscal support to the neglected housing sector. Once approved, this could be the first step towards including housing as a driver of the economic stimulus, creating jobs and incomes. Senator Risa’s proposed amendment, unlike Senator Recto’s, is the path to sustainable housing.