THE country’s housing backlog could worsen with the proposed removal of compensatory incentives given to the private sector undertaking socialized housing, think tank Center for Housing and Independent Research Synergies has warned.
Christopher Ryan T. Tan, president of the group, said mass housing developers oppose the planned repeal of incentives to socialized housing under Republic Act 7279, or the Urban Development and Housing Act, under the pending Tax Reform for Attracting Better and High-Quality Opportunities (Trabaho) bill.
If the incentives are removed, Tan said developers should not be compelled to do socialized housing at all. The current law grants incentives to the private sector, as developers are required to comply with the balanced development act mandating them to produce socialized housing projects equivalent to 5 percent for condominium projects and 15 percent for subdivisions projects.
“Removing this incentive will effectively paralyze private sector participation housing production,” Tan said.
A 2016 University of Asia and the Pacific study found the Philippines would have a housing need of 12.3 million by 2030, from a backlog of 6.7 million from 2001 to 2015, as well as a projected housing demand of 5.6 million from 2016 to 2030.
He explained that socialized housing is just a component of the total housing development project and could not be viable on its own as it is merely subsidized by the main project.
According to him, the incentives under the law 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.
“Removing such compensatory incentives to socialized housing will not only be unconstitutional, but will also reduce the balanced housing requirements to an unjust, oppressive and confiscatory exercise of police power,” Tan said.
The group also expressed apprehension over the proposed removal of the exemptions of the Home Development Mutual Fund or Pag-IBIG Fund from all kinds of taxes, fees and charges as stated under RA 9679.
“Current savings from Pag-IBIG’s tax exemption are channeled to providing interest subsidy to enable the lending for housing acquisition at a low of 3 percent for socialized housing,” the group said.
The Organization of Socialized and Economic Housing Developers of the Philippines said the incentives are crucial for a sustainable participation of private developers in the production and supply of socialized housing units.