GUEST COLUMNIST
CREBA SPEAKS
By Charlie A. V. Gorayeb
Charlie A. V. Gorayeb
Government figures confirm that there are currently some 5.2 million Filipino households within the poverty level and some nine million in the low-income level. The large majority do not have access to adequate housing, much less own their dwellings. Yet, government appropriations figures for the period 2010 to 2021 show that annual housing programs allocation averaged only 0.59 percent of the national budget.
Housing the underprivileged or underserved is supposed to be primarily a government responsibility; but historically, the housing budget has always been at the lowest rungs of government priority. As far as housing the poor is concerned, since the late 1980s, the government has contented itself with being a mere enabler – relying largely on mandatory social housing quotas, government guarantees, the private capital market, and tax incentives to entice private sector involvement.
Recently, there have been efforts through House Bill No. 4339 to repeal certain provisions of the Republic Act 8763 or the Home Guaranty Corporation Act of 2000 to remove tax exemption on interest income on loans covered by what is now Philguarantee.
These tax reliefs are intended to encourage the grant of housing loans to socialized and low-cost housing target beneficiaries on the premise that such exemptions would compensate for the inherent credit risk and relatively low profit for such type of lending. It may help to note that the law pegs the guaranty portfolio of Philguarantee at 40 percent socialized housing and 30 percent low-cost housing. The incentive is also meant to reduce its dependence on government budgetary support by enabling it to tap the capital markets more effectively in sourcing funds for its guaranty operations. This is on the premise that the tax exemptions would make the agency’s credit instruments more attractive to investors.
The repealing provisions of HB 4339 would not only serve to disincentivize home lending to the most needful sectors, but would also financially constrict Philguarantee and render it wholly dependent on government appropriations in serving the needs of its target beneficiaries.
House Bill 4339 also repeals tax exemptions on documentary stamp tax under Republic Act No. 7279 or the "Urban Development and Housing Act of 1992." These affected sections pertain to incentives for the National Housing Authority and certain benefits for the poorest of the poor – i.e. occupants of areas for priority development, zonal improvement program sites and slum improvement and resettlement program sites.
Revoking any tax exemption granted by RA 7279 to the NHA would seriously impair its ability to deliver services to the underprivileged and homeless beneficiaries, whereas rescinding an accommodation granted by said law to said beneficiaries may be interpreted as gross insensitivity to their plight.
House Bill 4339 also repeals tax exemption on capital gains on shares of stock and documentary stamp tax under Republic Act No. 9267 or the “Securitization Act of 2004” which would affect tacked-in benefits to secondary market institutions such as the National Home Mortgage Finance Corporation (NHMFC).
The secondary market for housing is still in a fledgling state. CREBA believes its development and growth to maturity should be fully assisted, rather than stunted by withdrawing whatever modicum of support it currently receives.
On behalf of the millions of underprivileged homeless, CREBA earnestly hopes that our lawmakers would reconsider these provisions in the bill. To our mind, until such time that the government is ready to shift back and commit itself to being a direct provider of housing, the status quo on these enticements should not be disturbed.
Otherwise, CREBA fears that the number of unserved or underserved, and the housing backlog of 6.5 million units as reported by the Human Settlements and Urban Development Department will continue to rise.
(Charlie A. V. Gorayeb is the national chairman of CREBA, the largest umbrella association of developers, builders, contractors, supplies manufacturers and professionals engaged in housing and various types of real estate development. With close to 30 chapters all over the Philippines, it has served as the ‘vanguard’ of the property sector since its inception in 1973.)