Mr. Frank Aboagye Danyansah ? CEO, Danywise Estate and Construction
Real estate developers in the country have expressed their displeasure about a proposed tax bill, currently before parliament, to aid in the construction of affordable housing.
According to them, the ?ambiguous? law, which waves tax obligation for construction firms engaged in affordable housing, leaves the definition of what constitutes ?affordable? at the discretion of a Minister of Works and Housing, in consultation with the Finance Minister.
Some members of GREDA who spoke to Business Day have argued that the provision, if passed into law, will expose the policy to abuse and corruption since the criteria for qualifying a building as affordable does not exist in Ghana.
In an interview with Business Day, the CEO of Danywise Estate and Construction, Mr. Frank Aboagye Danyansah explained that, initially, the law exempted local real estate developers from taxation in the first five years of construction but was changed in 2010 in an Internal Revenue Bill before parliament to consider only contractors engaged in affordable housing.
?Nobody has given a definition to affordable housing, what might be affordable to you, may not be affordable to someone; so how can a minister determine the affordability of a house in order to issue a certificate of clearance to qualify a contractor for tax holiday?.
He revealed that, industry players in the sector have expressed misgivings about the proposal since it could be misapplied by any government official who wishes to give a tax holiday to a developer.
He stated that even though the bill provides an avenue for an LI and regulation for effective implementation, what makes up affordable housing will make the law vulnerable to abuse by public officers.
Mr. Danyansah, who also operate in Liberia was of the view that implementation of the law would be practically difficult since it exempts commercial buildings.
?This industry is rooted in huge capital expenditure which the developer may not even be able to pre-finance. It involves a lot of money and risks; which means that the returns must be worth the risk?.
He argued that the provision can only be implemented by government agencies since no private developer will venture into such a capital intensive investment without a clear profit margin.
He counseled that government should aim at reducing taxes on raw materials used in the construction industry in order to send a rippling effect down the chain.
He lamented that the current situation and government?s housing policy does not address the real challenges estate developers face in the country.
He stated for example that government?s attempt to impose a 17.5 percent tax increment on the sector is needless and a disincentive to bridging Ghana?s housing deficit.
?The macroeconomic system is badly working against us, the exchange rate has caused prices of raw materials to rise astronomically. Taxing developers 17.5 percent will send a devastating blow to players in the industry?, he added.
He was of the view that, the country could even solve its rent challenges if a good housing policy is implemented.
BY LAWRENCE SEGBEFIA
