Perks mulled for mass housing projects

By Ma. Elisa P. Osorio Updated April 06, 2009 12:00 AM

MANILA, Philippines - In an attempt to generate more employment, the government is looking at enhancing the income tax holiday incentive program for industries that create more jobs like mass housing.

“We are looking at the guidelines for industries that have big multiplier effect like mass housing,” Board of Investments managing head Elmer C. Hernandez told reporters in an interview over the weekend.

“Traditionally, construction projects bring in more employment because it is a labor intensive undertaking. Likewise, it fuels the economy because it spurs economic activity in surrounding areas,” Hernandez said.

According to Hernandez, the tax holidays for mass housing projects are diminishing through the years. In order to encourage developers to put up more projects that will create more jobs, he said they are thinking of revising the scheme.

When asked if there are other industries that will enjoy the same benefits, Hernandez said they are still studying the matter. “For as long as they can create more jobs, then we are open to giving them more perks.”

For the first time, the government is looking at giving incentives to companies who will not be laying off workers during the economic crisis. The government will be giving perks to companies who will maintain the current number of employees while removing incentives to telecommunications companies.

“We have to focus on job saving now. Manufacturing firms that normally would not qualify under the IPP (Investments Priorities Plan) because they have no new investments could apply for perks,” Hernandez explained.

The proposed 2009 IPP has not yet been signed by the President. It will be similar to the one passed in 2008 except for the job saving/job creation projects.

Hernandez said that there are four criteria that will qualify under job saving or creation projects. First is to retain investments and maintain current number of employees. Second, retain investments and increase current number of employees. Third, increase investments and maintain current number of employees. Fourth, increase investments and increase current number of employees.

“This is an option to existing firms on how they can avoid laying off workers,” Hernandez noted. “These are difficult times and extraordinary measures are needed,” he added.

Hernandez said that under the law, firms that will not have additional investments do not qualify for income tax holidays. However, because these are extraordinary times, he said the government will give additional deduction for labor expense. This would bring their taxable revenues down thus reducing tax payments to the government.

Hernendez said not all firms who will not cut employment will qualify. The firm must first prove that without the incentive provided by the government, they will be forced to retrench a certain number of people but because of the tax break, they will be keeping the entire work force.