Mass housing dev’t maintained in 2014 Investment Priorities Plan list
The draft 2014 Investment Priorities Plan (IPP) still continues to list mass housing as one of economic activities that could be eligible for income tax holiday (ITH) as mass housing developers stressed the need for incentives to make their operations more viable. This developed despite strong opposition from the Department of Finance against the granting of tax breaks to an industry, which has been growing robustly.
A source privy to the crafting of the annual list of priority sectors that would be entitled to a package of tax and fiscal incentives from the government said the Board of Investments still retains mass housing in the proposed 2014 IPP.
The DOF has been urging for the removal of mass housing from the IPP for the past few years. The DOF also called for the removal of other areas such as motor vehicles and air transport last year.
However, the DOF, the government’s premier tax revenue generator, has not been successful in its efforts to clip incentives to the mass housing sector, which has seen huge project registrations in the past few years.
In 2013, mass housing sector was the third biggest sector that registered a total of P42.10 billion worth of investments on various projects with the BOI. This sector’s investments accounted for 10 percent of the total P403.17 billion investments approved by BOI in 2013.
The first two biggest investment pledges came from power and energy sector (P268.24 billion or 67 percent share), and the transportation and storage sector (P67.66 billion or 17 percent share).
In the first two months of 2014, real estate projects approved by the BOI reached P17.959 billion more than half of the P30.239 billion toto investments approved in the January-February period.
These projects are SM Development Corp., which is owned by the Sy Group, has registered two projects. These are Shore Residences Tower C and Tower D in Pasay City with a project cost of P5.958 billion, and Shore Residences Towers A and B also in Pasay City with a project cost of P2.795 billion.
Mass housing projects are approved on non-pioneer status and are normally entitled to four year income tax holiday.
Industry groups have maintained their position for government to retain incentives for the mass housing sector stressing that IPP adjustments should not be made on an annual basis because mass housing projects cannot be completed within one year. Based on the industry roadmap, the Subdivision and Housing Developers Association (SHDA) has estimated the national housing backlog to over 3.9 million units, rising to 6.5 million by 2030 if the problem is not addressed.