Tax hike on private schools violates intent of the law

    Five senators appeal to the Bureau of Internal Revenue to reconsider its implementing rules that increased the income tax of private schools from 10 percent to 25 percent.
    The lawmakers agree the move by the revenue office violates the intent of the law (Republic Act 11534) to raise revenue while granting relief to businesses, including private schools, hard hit by the pandemic.
    House Deputy Speaker Rufus Rodriguez decries the same.

    MANILA — Under the CREATE (Corporate Recovery and Tax Incentives for Enterprises) Law, the Government’s new revenue regulation of increasing taxes on private schools is illegal, calls Congressman Rodriguez.

    A legal expert and a former law school under, the congressman says the Bureau of Internal Revenue (BIR) Regulation No. 5-2021 violates provisions of the 1987 Constitution. The regulation imposes 25 percent in corporate tax to proprietary schools.

    “The action of the BIR is contrary to the 1987 Constitution which mandates that: ‘The State shall give priority to education’ (Article II, Section 17) and ‘The State shall protect and promote the right of all citizens to quality education at all levels and shall take appropriate steps to make such education accessible to all’ (Article XIV, Section 1),” says Congressman Rodriguez.

    He calls on the BIR and the Department of Finance to immediately rescind RR 5-2021, echoing a similar outcry from Senators Sherwin Gatchalian, Maria Lourdes Nancy Binay, Juan Edgardo Angara, Joel Villanueva, and Senate President Pro Tempore Ralph Recto in separate instances.

    According to the senators, the BIR had interpreted the law in a “wrong” way. Three senators find it ridiculous that the BIR had to more than double the tax to private schools, which had been paying 10 percent in the past.

    “The title alone of the law [CREATE] clearly shows its intention: corporate recovery and tax incentives,” Senator Recto points out.

    Meanwhile, Congressman Rodriguez warns, more private educational institutions might be forced to fold up due to the BIR regulation, citing data from the Department of Education showing that for school year 2020-2021, enrollment in private K-12 schools dropped by over 900,000 compared to the previous school year.

    The Coordinating Council of Private Educational Associations (COCOPEA) has reported that half of their members have experienced a decline in enrollment, he says.

    If the BIR-imposed rate is not corrected, “more schools will be forced to close down or raise their tuition and other fees to the detriment of our students and their families.”

    With increased fees, students may opt to transfer to the already crowded public school system, or drop out, he adds.

    Last week, the BIR decided with finality to reject the letter-appeal of the COCOPEA opposing RR 5-2021, after it has exhausted legal avenues for the tax collecting agency to correct its tax rate. (LO/The MiNT)


    Please enter your comment!
    Please enter your name here