Vol. XXII, No. 181 [ BusinessWorld Online ]
Friday, April 17, 2009 | MANILA, PHILIPPINES
MASS HOUSING projects should continue to be granted tax perks this year, since these investments spur economic activity and create jobs, Vice-President Manuel "Noli" L. de Castro said, backing a proposal by the Board of Investments (BoI).
The Finance department, however, has stressed that granting such tax breaks would further erode much-needed revenues.
Earlier, the BoI had said that it may be more generous this year in granting tax perks to mass housing projects and other business activities that employ a large direct and indirect work force.
The "diminishing income tax holiday" for mass housing projects may be lifted in this year’s Investment Priorities Plan, BoI Managing Head Elmer C. Hernandez had said.
‘A great multiplier’
In a letter addressed to Mr. Hernandez furnished media yesterday, Mr. De Castro lauded the proposal.
"Indeed, housing construction has a great multiplier effect on the economy. Every million-peso investment in housing generates P16.6 million worth of economic activity. Further, the development of a lot and the construction of a housing unitcreates jobs for about eight workers for at least three weeks," Mr. De Castro said in the letter dated last April 7.
"In this regard, we are calling for your full support for the continued inclusion of mass housing in the IPP for 2009 and the next years," Mr. De Castro said.
Asked to comment, Finance Secretary Margarito B. Teves said in a mobile "text" message yesterday: "The timing is rather difficult. [We] need to generate more revenue."
University of the Philippines economist and former Budget Secretary Benjamin E. Diokno shared Mr. Teves’ sentiment.
"Any and all measures that will lead to a narrower tax base should be avoided given the large and increasing budget deficits," he said in a separate "text" message yesterday.
"The total cost...of the social housing industry should be subject to closer scrutiny in light of the subprime crisis in the US," Mr. Diokno added.
The draft for the 2009 IPP has been submitted to Malacañang. BoI, meanwhile, is currently drafting the guidelines for the implementation of the IPP. — Jessica Anne D. Hermosa