Bill exempting condo dues from income tax and VAT filed

BAYAN MUNA Rep. Neri J. Colmenares and Rep. Teddy Casino filed this week House Bill 6768 exempting condominium dues and housing association dues from income tax and value added tax arguing that such will increase the cost of housing and discourage people from buying or acquiring their own homes.

The bill is a response to recent attempt of BIR through RMC 65-2012, to impose income tax and VAT on association dues including those from socialized housing and low-cost housing homeowners.

“The executive department always have a simple solution to its budgetary needs and its chronic fiscal deficit—taxation. Government does not seem to notice that the BIR and the Customs Bureau continue to fail in meeting their revenue targets due to corruption and inefficiency, that billions of pesos in income are lost due to sweetheart deals with foreign investors and favored cronies, that hundreds of billions of pesos in public funds are lost in corrupt transactions and projects, that billions more are lost because of inefficiency, incompetence and red tape, and another round of hundreds of billions are lost in the payment of debts that were spent on overpriced projects that are crippled by corruption and irregularities” said Rep. Colmenares.

“A government that has failed to address misplaced profligacy, incompetence, inefficiency and corruption has no moral authority to impose taxes on the people already crippled by rising prices and unemployment. This lack of moral authority is never more pronounced than government attempts to tax a basic need of the people enshrined it is constitutional right to shelter—housing” Colmenares added.

The bill amends Section 32 (f) of RA 8424 or the National Internal Revenue Code (NIRC) which provides for the exemption from income tax of GSIS, SSS, Medicare, and union contributions, by including “amounts paid as association dues or membership fees” by tenants of a housing tenement. It also amends Section 109 (t) of the RA 8424 which exempts from VAT gross receipts of multi-purpose cooperatives to include “gross receipts of condominium corporations or homeowners associations for amounts paid as association dues or membership fees”.

“Association dues or membership dues are paid by homeowners to their housing association or condominium corporations for the upkeep and maintenance of their housing tenements, common areas of their condominium buildings and other items that will help ensure a safe and healthy environment for homeowners” said Rep. Casiño.

“These cannot be considered income because it can only be spent on the intended purpose of homeowners who placed it in trust of the homeowners association or condominium corporations. The association has no discretion in the use or spending of these funds which, cannot therefore be considered as the income of this association,” said the Makabayan bet.

Colmenares also condemned the imposition of VAT on association dues. “Certainly payment of homeowners association dues cannot also be deemed as payment for sale or services or any transaction subject to VAT. The collection of association dues and other assessments were merely held in trust to be used solely for administrative expenses in implementing its purposes, such as operating, managing and maintaining the condominium, and from which no gain or profit can be realized by the condominium corporation from the receipt thereof” Colmenares explained.

Bayan Muna condemned government inconsistency in housing policy by imposing a tax which will hit not only the poor in socialized housing units but even the middle class who wants to invest in owning their own homes.

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