MANILA, Philippines - The Housing and Urban Development Coordinating Council (HUDCC) and the Subdivision and Housing Developers Association Inc (SHDA) have joined together to fight Board of Investments (BOI) decision to tighten the rules on the grant of incentives by lowering the mass housing cap to P2 million.
In an interview, BOI Executive Director Lucita P. Reyes confirmed that HUDCC has already expressed its opposition to the lowering of the mass housing ceiling to P2 million from the original P3 million.
Originally, mass housing projects that are worth P3 million and below are given income tax holidays (ITH). However, in the proposed 2011 Investment Priorities Plan (IPP), the BOI has decided to lower the ceiling to P2 million because computations showed that an average middle income family can only afford P2 million and not P3 million.
SHDA has already submitted their position paper to the BOI contesting the move. In their five page paper, SHDA national resident Manuel C. Crisostomo said that the P3-million price ceiling should be retained.
“We are in the midst of a crisis and we need incentives to improve our economy with housing as having the biggest multiplier effect. It is ironic that other countries are spending billions to pull their economies out of negative growth while we are removing incentives to an industry that increases economic growth,” Crisostomo said.
SHDA said they are not in favor of the cut because HUDCC in a memorandum defines mass housing with a ceiling of P3 million.
In a separate interview SHDA chairman Bansan C. Choa said that the P2 million is too low. “I don’t think we can just change the law. Republic Act 7279 defines mass housing as houses worth P2.5 million below.”
However, Reyes said they are not changing the definition of low cost mass housing. They are merely exercising their right to be strict in giving incentives.
“The Board (BOI Board) has the power to grant and remove incentives. Incentives are privileges,” Reyes stressed.
Likewise, Choa said that this will decrease the market for mass housing because developers will no longer build houses for the P2.5 million to P3 million segment.
However, BOI managing head Cristino L. Panlilio said that the lowering of the threshold for mass housing is a good compromise. “You have to understand that the government cannot give away everything.” He said that real estate developers will be able to sell houses to low income households and at the same time collect taxes from higher value properties.
“Besides based on the report of real estate developers like SM Development Corp. the units that they were able to sell were priced at P1.9 million,” Panlilio explained.
“If there was a big market in the P3-million category as they say then the developers will go for it with or without incentives,” he said. “The government needs to prioritize. The government cannot give away what it needs and those are taxes. The P2 million is a livable amount.”