More senators urge BIR to revoke tax hike on private schools

Jaehwa Bernardo, ABS-CBN News

Posted at Jun 07 2021 11:40 AM

MANILA — More senators have called on the Bureau of Internal Revenue (BIR) to rescind its new policy increasing the income tax of private schools by 150 percent, which they said may lead to more school closures during the pandemic.

In separate statements, Senators Nancy Binay, Ralph Recto, Joel Villanueva and Sherwin Gatchalian said the new tax rule goes against the objective of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act to cushion the pandemic's impact on businesses struggling to stay afloat.

"We passed the CREATE Law to help businesses survive the effects of the pandemic through tax incentives. The law plainly states the need to create a more equitable tax incentive system that will allow for inclusive growth and generation of jobs," Binay said on Sunday.

"Wala sa intensyon ng batas dagdagan pa ng pasanin at pasakit ang mga eskwelahan," she said.

(The law does not intend to add to the burden of schools.)

The BIR recently raised the income tax of so-called proprietary educational institutions from 10 to 25 percent, which Recto described as "illogical" and "absurd."

Senators agreed to bring down schools' tax rate from 10 percent to 1 percent "to help them evade bankruptcy during the pandemic," Recto said.

Gatchalian, who chairs the Senate basic education committee, called on his colleagues to exercise the Senate's oversight powers.

"I propose further amendments to the National Internal Revenue Code (NIRC) to protect private schools from the potential consequences of this policy such as school closures, more job losses, and hampered access to education during the community quarantine," he said.

Villanueva said government agencies should "always consult House and Senate records to discover the clear intent behind the provisions, especially ones that could be subject to multiple interpretations."

"If CREATE was a measure that slashes corporate income taxes, then the legislative intent was that private schools should benefit from the across-the-board reduction," he said.

Sen. Sonny Angara, who chairs the Senate finance committee, has filed a bill that seeks to amend a section of the NIRC to correct the BIR's "erroneous" interpretation on the tax imposed on proprietary educational institutions.

The Coordinating Council of Private Educational Associations of the Philippines (Cocopea) last week warned that the tax hike may lead to more struggling private schools to shut down.

Last Friday, the Cocopea and some 600 private school groups and individuals appealed to President Rodrigo Duterte to "correct" the new BIR regulation.

The new policy would also "severely" affect "members of the communities built around schools, such as school uniform sewers, cafeteria workers, carinderias, sari-sari stores, dormitories, janitorial/security services, school bus drivers/helpers, bookstores, book suppliers, and informal businesses around the campuses," they said.

More than 800 private schools offering basic education halted their operations last year, displacing thousands of students and teachers, according to data from the Department of Education.

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