Wednesday, August 15, 2018 | ePaper

Housing for the low and middle income groups

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Dr. M Abul Kashem Mozumder and Dr. Md. Shairul Mashreque :
The importance of housing for a better life and living conditions can hardly be overemphasized. Every citizen deserve home for feeling at home. It gives shelter from rain, storm and other natural calamities. A family is an eating group sharing a hearth or roof. So a family, rich or poor must have a dwelling place. "Like any other country in the world, the housing sector plays vital roles both in the context of the economy of Bangladesh and serving the fundamental human right of shelter. Beyond providing physical shelter, housing may have significant impact on the lives of the dwellers in terms of skills enhancement, income generation, increased security, health, self-confidence and human dignity. In most regions, housing has the potential of becoming an engine of economic growth because of its high yield on invested resources, a high multiplier effect, and a host of beneficial forward and backward linkages in the economy. Apart from providing physical shelter, housing may have significant impact on the lives of the dwellers in terms of skills enhancement, income generation, increased security, health, self-confidence and human dignity. Bangladesh, like many other developing countries, faces an acute shortage of affordable housing both in the urban and rural areas. Given all these housing sector has not been adequately valued in our national budget ever and as a result this sector could not flourish the way it could if it had been given sufficient opportunities. However, this is also true that this sector has experienced considerable growth in past few decades. With a rising population and increasing housing demand, apartment culture has grown up in Dhaka penetratingly. During the last decade, the total volume of Real Estate, Renting and Business service sector increased every year, which implies a positive growth in the sector every year. But, compared to overall GDP growth, this sector expanded at a slower rate. That is why in overall GDP the contribution of this sector has a downward trend.
The Constitution of the People's Republic of Bangladesh under Article 15 provides that it shall be a fundamental responsibility of the State to attain, through planned economic growth, a constant increase of productive forces and a steady improvement in the material and cultural standard of living of the people, with a view to securing to its citizens, the provision of the basic necessities of life, including food, clothing, shelter, education and medical care. With an increase of registration fees in the proposed 2018-19 budget the hopes of the low and middle-income groups will cry in be wilderness.  Only the upper class will have access to beautiful l houses like apartment.  The policy maker should think of numerical position of the middle and low-income groups vis-à-vis the upper and rich class.  Policy is biased to the affluent tycoons, as they are influential having much to mould the perceptions of policy makers.  So good news for those who can command resources and disappointment for those who find it difficult to make both ends meet.  The oppression is that higher registration fees for 1000 or 1100 sq. fit will discourage the ordinary masses to purchase a flat. Higher income group will not go further as they have a number of apartments.  As a result REHAB will have to suffer tremendous loss.  According to news reports:
Bad news for the middle-income group as the government has opted to impose higher VAT rates for smaller apartments at a time when sales have picked up Flats upto 1100sqft, which had 1.5 per cent VAT, will now come under the purview of 2 per cent VAT, according to the proposition of Finance Minister AMA Muhith. However, things are a bit brighter for those with higher income and seeking out flats between 1101sqft to 1600sqft, as the VAT on such apartments have been brought down to a flat 2 per cent, what was previously 2.5 per cent.VAT for flats above 1,601-sft will remain unchanged at 4.5 per cent next fiscal year and they will not have to bear additional indirect tax, which the customers have to bear.
The fresh VAT measures imposed on the pre-election budget come at a time when real estate companies have been demanding reduction in registration cost of flats. lso, since last December, real estate business has picked up. Realtors have been eyeing plenty sales in 2018 with the bank interest rates coming down to single digits.Meanwhile, re-registration of old flats will have an imposition of 2 per cent VAT.At present, the fresh registration cost hovers around 14 to 16 percent of the flat price, depending on its size.

(Dr. M Abul Kashem Mozumder, Pro-VC, BUP and Dr. Md. Shairul Mashreque, Retired Professor, Chittagong University).

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