Mass housing developers: Removing perks makes it harder to pursue projects

By Jose Santino S. Bunachita |August 24,2018 - 11:31 PM

MASS housing developers across the country are joining other industries in asking government not to remove incentives being enjoyed by the private sector in the proposed second tax reform package.

According to the Organization of Socialized and Economic Housing Developers of the Philippines (OSHDP), these incentives help housing developers cope, especially since they are required to also go into socialized housing.

Under the Balanced Housing Development Program, developers are mandated to produce socialized housing projects equivalent to 5 percent for condominium an 15 percent for subdivisions.

“Removing this effectively paralyzes private sector participation in production,” the OSHDP said.

The proposed Tax Reform for Acceleration and Inclusion (Train) 2 bill in Senate and a similar Tax Reform for Attracting Better and High-Quality Opportunities (Trabaho) bill in the House of Representatives includes a clause expressly repealing the incentives to socialized housing under the Urban Development and Housing Act (UDHA).

In a statement, the OSHDP explained that socialized housing programs being undertaken by developers are merely subsidized by their main housing projects.

This is why they said it will become harder for them to pursue socialized housing projects if incentives for developers are removed once the Train 2 or Trabaho bills are approved by Congress.

“Hence, the incentives currently enacted under Sec. 20 (d) (1) to (5) of R.A. 10884, which amended R.A. 7279), are mere ‘compensatory incentives’ for doing a ‘missionary’ activity, and should not be misconstrued as ‘investment incentives’ to be lumped under the proposed Strategic Investments Priorities Plan (SIPP) envisioned under the proposed Train 2 bills,” the OSHDP pointed out.

The group added that removing incentives for socialized housing would go against the 1987 Constitution which mandates the State to undertake with the private sector a continuing program of urban land reform and housing which would make available affordable and decent housing to the underprivileged.

The OSHDP has already submitted a position paper expressing opposition to repealing of incentives being given to private participants to socialized housing under the proposed Train 2 bills.

The OSHDP also expressed opposition to the bills’ proposed removal of the tax exemptions of the Home Development Mutual Fund or Pag-IBIG.

They said Pag-IBIG should continue to be tax exempt similar to the Social Security System, GSIS, and Philhealth.

Under Section 19 of R.A. 9679 or the Pag-IBIG’s revised Charter, “the Fund (Pag-IBIG) and all its assets and properties, etc., shall be exempt from all kinds of taxes, fees and charges.”

Current savings from Pag-IBIG’s tax exemptions are channeled to providing interest subsidy to enable the lending for housing acquisition at a low of 3 percent for socialized housing.

These also enable Pag-IBIG to operate its Affordable Housing Program for low-income workers, comprising the bulk of the homeless population, and of the estimated 5.7 million in current housing shortage, the OSHDP added.

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