by Julito G. Rada
[ manilastandardtoday.com ] January 24, 2011
THE government is considering lowering the price ceiling on low-cost mass housing to P2.5 million instead of P2 million from P3 million now, a source said over the weekend.
Developers had earlier opposed the Board of Investments’ proposal to lower the price ceiling to P2 million, saying that would shrink their market. They proposed maintaining the maximum price at P3 million.
It wasn’t clear how lowering the price ceiling would shrink their market, since the price would be more affordable.
“The Trade Secretary [Gregory Domingo] is studying this idea of maintaining the price cap at P3 million, but it probably won’t go that way,” the source said.
“Maybe [the price cap will be lowered to] P2.5 million.”
The source said the Board of Investments was also considering exempting mass housing from the value-added tax.
“The purpose of the exemption is to help the people who may avail [themselves] of these projects,” the source said.
“So there is a need to thoroughly study these things.”
Trade Undersecretary Cristino Panlilio had earlier said the main purpose of reducing the price ceiling to P2 million from P3 million was “to help those living [and working] within the urban areas.” He cited a recent study showing that a couple earning P50,000 a month could not afford to buy a house costing more than P2 million.
“That is the [Board of Investments’] calculation, so the only way to make these low-cost mass housing affordable is to reduce the price ceiling to P2 million,” he said.
Still, developers last week insisted on retaining the P3-million price ceiling on low-cost mass housing in the Board of Investments’ 2011 Investment Priorities Plan, saying the industry had a high multiplier effect on the economy.
The Subdivision and Housing Developers Association Inc. said the real estate industry was helping to boost the economy because it was creating more demand for steel, cement and wood products.
“All these economic activities generate value-added taxes, which will decrease in proportion to the slowdown in housing production,” the group said. It said the government’s tax incentives were motivating developers to produce more mass housing, resulting in creation of more jobs in the construction industry.
Mass housing is one of the preferred activities retained in the list of projects under the draft of the investment board’s Investment Priorities Plan this year.
The others are agriculture, agribusiness, fisheries, the creative industries, shipbuilding, energy, infrastructure, research and development, green projects, tourism and strategic projects.