SANTO DOMINGO. - The additional burdens that the Fiscal Modernization bill proposed by the government would place on housing come at a time when high interest rates and high inflation have recently caused increases of between 45 and 55% in the price of this universal basic good, warned Annerys Meléndez, president of the Association of Housing Builders and Developers (Acoprovi), yesterday during public hearings.
Expanding on the arguments the construction industry has put forward this week to reject the 2024 tax reform, the businesswoman explained that the fight isn't just about low-cost housing. "It's also about middle-income housing, which makes up 86% of the market, and if we don't build middle-income housing, we'll destroy the low-cost housing market," she asserted.
He used the platform to call on the national conscience and the congressmen to review the measures, since in his opinion they are not consistent with the efforts being made to reduce the housing deficit in the country, after acknowledging that the current administration has made historic contributions to the housing law.
Meléndez called for reflection so that consideration is given to those segments of Dominicans who are forming new families, to hopeful young people who may have children, or to those who have saved all their lives for the dream of a roof over their heads and who are suddenly excluded from their constitutional right.
He said that the tax reform presents a bleak scenario for housing, threatening an unsustainable increase in prices "that we estimate would leave six out of ten Dominicans without access to their first home.".
Annerys Meléndez, during her presentation. (Fidel Pérez/El Inmobiliario).
He reiterated the sector's concern about the decades-long setback the project could cause in the housing sector, particularly regarding access to affordable housing. "The reduction and elimination of some critical points in this package of fiscal measures is imminent in order to mitigate the adverse effects on the housing sector, thus ensuring that the effects of modernizing the economy do not compromise the Dominican people's constitutional right to decent housing," he stated.
He reiterated the points of the tax reform that have generated alarm in the sector he represents, supported by figures:
The elimination of the differentiated Income Tax rate for housing trusts, by which measure alone the price of housing would increase by 12.5%, according to the study carried out in the registry of housing units approved in low-cost projects from 2013 to 2024 of the Ministry of Housing, Habitat and Buildings (Mivhed).
“Secondly, the inclusion of the 18% Value Added Tax (VAT) on non-industrialized goods such as sand, gravel, caliche and others affects the price of concrete, blocks, plaster, fills and others, as expressed in article 16 of the reform.”.
The representative of the builders added to the data sheet the inclusion of VAT on the transport of materials and boats when everything in the construction is transported to the works.
“The 50% increase in withholdings made to construction labor by increasing the withholding on fees of individuals from 10 to 15%,” he emphasized.
According to the analysis presented, the outlook is further complicated by the fact that rental prices would rise due to a reduction in the supply of housing for these rental purposes and a significant increase in costs for landlords, as a result of the proposal.
“All these factors will cause a collapse in housing demand, decreasing sales by approximately 56%, which would motivate a reduction of approximately 77 billion pesos in investment in new housing real estate projects, in turn causing negative impacts on the Gross Domestic Product (GDP) and the reduction of more than 115,000 jobs,” he predicted.
In his opinion, the Executive Branch's proposal, if approved, would lead to an irreparable decrease in housing construction in recent years, drastically halting the progress made in reducing the housing deficit in the country, thanks to the trust fund.
