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DOF bucks perks for ‘mass housing’

[ ] April 4, 2011
THE Department of Finance (DOF) is bucking the tax perks that mass-housing developers may enjoy under this year’s proposed incentives plan.
Finance Secretary Cesar Purisima said the DOF early last week blocked the tax incentives that mass housing developers were poised to enjoy under the draft 2011 Investment Priorities Plan (IPP), even though such perks were already tightened by the Board of Investments (BOI).
“We had a big debate on mass housing. If we want to subsidize people who want houses, we can do it in many ways. We can lower the rate the Pag-Ibig charges, we can lengthen terms of Pag-Ibig [loans], or we can give direct subsidy to the target groups,” Purisima said.
“If we need to subsidize a particular group of people, I believe a direct subsidy is the best way to go about it. But don’t complicate our collection effort in the revenue department,” he said.
The BOI set a P2.5 million ceiling on low cost mass housing units eligible for perks under the 2011 IPP. This is higher than the P2-million cap the incentives-giving agency earlier proposed.
Department of Trade and Industry Undersecretary Cristino Panlilio had said the BOI was firm on its recommendation that only low cost mass housing units worth P2.5 million and below shall be entitled to tax incentives under this year’s IPP.
Panlilio said low cost mass housing units worth less than P2.5 million were “80 [percent] to 90 percent of what is considered affordable housing for the middle market.”
The Housing and Urban Development Coordinating Council defines low cost housing as units that cost between P751,000 and P3 million.
A debate, however, has risen over the definition of mass housing, which under previous IPPs had enjoyed tax perks even though low-income earners couldn’t afford the P2 million to P3 million price for vertical units with floor areas of 20 to 30-square meters.
Fiscal authorities have proposed prohibiting such units from availing tax perks since only high-income earners could afford to buy them.

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