SANTO DOMINGO.– Several associations in the Dominican Republic's construction sector yesterday expressed their position on the Fiscal Modernization Bill proposed by the government last week, which is currently being studied in the Chamber of Deputies.
The Association of Housing Developers and Builders of Cibao (Aprocovici); the Association of Developers and Builders of Altagracia (Adecla), the Association of Real Estate Agents and Companies (AEI), and the Dominican Association of Housing Builders and Developers (Acoprovi) addressed the issue at a press conference convened for this purpose, where they expressed their concern, arguing that the government's proposal, if approved, would represent a setback of decades in the housing sector, particularly in access to affordable housing.
According to the figures contained in the press release, the variables that would change the landscape of the concrete block and cement sector in the country, following the approval of the reform, would be diverse. We share the data from the figures analyzed by construction industry representatives:
-Just as a result of eliminating the differentiated ISR rate for housing trusts, the price of housing would increase by approximately 12.5%.
-These increases would be compounded by an 18% increase due to the Value Added Tax (VAT), on the sale of homes, on transportation and on non-industrialized goods such as aggregates, and due to the 50% increase in withholdings made on labor.
-The tax reform would result in a total increase in housing prices of more than 30%.
-59% of Low Cost Housing (VBC) projects would lose their current rating, causing buyers to lose access to the Low Cost Housing bonus, thus jeopardizing the social housing plans promoted by the government itself.
– 6 out of 10 Dominican families would be disqualified for not having the necessary resources to cope with these increases, pushing away the dream of thousands of Dominicans to have a decent home.
-Rental prices would rise due to a significant reduction in the supply of housing for these purposes, and a significant increase in the cost for landlords, as a result of the decrease in the IPI base from 9 million to 5 million and the revaluation of properties.
-Sales would decrease by approximately 56%, which would lead to a reduction of around 77 billion pesos in investment in new projects, causing negative impacts on the Gross Domestic Product.
“There would be a reduction of more than 115,000 jobs.
These estimates are based on conservative scenarios according to the 2023 data from the MIVHED's Bulletin of Statistics on Application and Issuance of Housing and Building Construction Licenses.
