Published on Monday, 20 May 2013 00:00
Written by IRMA ISIP [ Malaya.com.ph ]
Malaya
Business News Online - Philippine Business News | Online News Philippines
The Chamber
of Real Estate and Builders Associations (CREBA) said the housing industry
still needs the tax breaks the government is thinking of scrapping. It instead
proposed encouraging the building of socialized condos to ease the housing
backlog that will not drain government coffers.
The
Department of Finance has earlier suggested that mass housing be removed from
the proposed 2013 Investment Priorities Plan (IPP).
Mass housing
-defined as socialized and low-cost- currently get tax perks from the BOI.
These are housing packages worth up to P400,000 and up to P3 million,
respectively.
Charlie
Gorayeb, national president of CREBA, in reaction to the DOF proposal
said, that this will add to the housing
backlog.
He said the
Housing and Urban Coordinating Council estimates the current housing backlog at
3.7 million units but that the National Urban Development and Housing Framework
2009-2016 estimates that the housing need, which covers the housing backlog and
the annual compounding new housing demand to reach 5.8 milion units in 2016.
Gorayeb said
CREBA is supporting the passage of a law that will require developers of
condominium projects to be also covered by the so-called 20-percent balanced
housing provision of Republic Act . 7279 or the Urban Development and Housing
Act (UDHA). Section 18 of this law requires developers to allocate the
equivalent of 20 percent of each subdivision to socialized housing.
CREBA’s
proposal though would be novel as it would be an alternative mode of compliance
to the provision, if and when condo developers are covered by the requirement.
The enabling law, House Bill 5446, did not make it in the last Congress. This
would entail the construction of new socialized residential condominiums or
medium-rise buildings (MRBs) with a minimum floor area of 20 square meters and
a ceiling price of P850,000 per unit located in urban areas.
“The recent
trend of development on housing tends to gravitate towards vertical housing. If
we can jointly advocate requiring these developers to comply with the balance
housing requirement, it will add to the supply in the urban areas where they
are needed the most,” said Gorayeb in his letter addressed to BOI executive director
Lucita Reyes.
Gorayeb said
that in order to entice developers to invest in the production of socialized
MRBs, they also should be granted incentives.
Based on
CREBA’s computation, the average return on investment in socialized housing is
15 percent without tax holiday and 17.5 percent with tax holiday.
“The ROI is
meager considering the risks involved in the development of socialized
housing,” Gorayeb said.
The group
also laments the fact that developers of mass housing continue to be subject to
tedious requirements including the presentation of a ruling of issued by the
Bureau of Internal Revenue (BIR) national office for every housing project that
is granted exemption from the payment of creditable withholding tax (CWT).
The ruling is
required by the BIR before the issuance of the certificate of authorizing
registration (CAR), a foremost precondition of the Registry of Deeds for the
transfer of the certificate of title.
Without the
revenue ruling, the certificate of income tax holiday (ITH) issued by the BOI
is not honored as sufficient evidence of tax exemption and thus the revenue
district officers will only release the CAR after collecting the CWT.
“Private
sector stakeholders involved in the development of socialized housing are
hampered by the tedious, strenuous and costly process of availment [of ITH],”
said Gorayeb. This has delayed if not discouraged developers to apply their
projects for incentives with the BOI.
Gorayeb said
housing, especially one in mass, is capital and labor intensive. Housing
construction generates at least 8.3 jobs for a minimum of three weeks for every
housing unit that is built, according to government data quoted by Gorayeb.
The government’s
Medium Term Philippine Development Plan estimates the multiplier effect of
housing at 16.6 times—every P10 billion invested in housing translates to P166
billion in economic activity.
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