Finance bucks perks for mass housing developers
by Elaine Ramos Alanguila
[ manilastandardtoday.com ] April 4, 2011
The Finance Department is opposing proposals to grant incentives to mass housing developers under this year’s Investment Priorities Plan.
Finance Secretary Cesar Purisima said he was more agreeable to granting direct subsidies to those who wanted to buy their own house by way of lower interest rates and longer payment terms, instead of subsidizing the developers who are in the business of building houses.
“If we want to subsidize people who want houses, we can do it in many ways. But don’t complicate our collection effort in the revenue department. If we need to subsidize a particular group of people, I believe a direct subsidy is the best way to go about it,” said Purisima in a forum last week.
He said the Finance Department was objecting to the proposed fiscal incentives for mass housing developers under this year’s IPP, an annual rolling list of preferred sectors that are entitled to enjoy perks such as income tax holidays and duty-free importation in return.
“For example, we had a big debate on mass housing. If we want to subsidize people who want to buy a house, we can do it in many ways. We can lower the rate the Pag-Ibig [Home Development Mutual Fund or Pag-IBIG Fund] charges, we can lengthen terms of Pag-Ibig [loans], or we can give direct subsidy to the target groups,” said Purisima.
The Finance Department has in the past opposed the grant of incentives to developers, although the Board of Investments, the main agency that administers the perks, tightened the requirements for mass housing developers.
Trade Undersecretary and Investments board managing head Cristino Panlilio said only housing units worth P2.5 million and below were eligible for tax incentives under the IPP, saying these are “80 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.
At this price range, even vertical units worth P2 million to P3 million that are merely studio-type residences with only about 20 to 30 square meters in floor area and built for the higher income market are also eligible for tax perks.
