A petition for certiorari prohibition seeking a temporary restraining order and injunction to the implementation of a Bureau of Internal Revenue order increasing the tax on private schools has been filed by private education stakeholders before the Court of Tax Appeals in Quezon City.
If implemented, Revenue Regulation 5-2021 will result in a 150 percent increase in the tax of private schools.
The petitioners – the Philippine Association of Colleges and Universities, the Coordinating Council for Private Educational Associations (COCOPEA) and 27 Proprietary Educational Institutions across the country – warned the new BIR policy will have widespread consequences to stakeholders of the private education sector at a time when it is fighting for its survival amid plunging enrollment caused by the pandemic.
Meanwhile, Sen. Juan Edgardo Angara said he expects the approval by an overwhelming majority in the Senate of his proposed measure explicitly declaring that private schools are exempt from the 25 percent corporate income tax.
At present, seven senators have signed on to Senate Bill 2272 filed by Angara that seeks to prevent the possible loss of jobs of thousands of teachers and non-teaching personnel in private educational institutions and the livelihood of several small businesses due to an erroneous interpretation of a provision of the Tax Code.
Majority Leader Juan Miguel Zubiri and Senate President Pro Tempore Ralph Recto as well as senators Joel Villanueva, Nancy Binay, Sherwin Gatchalian, Grace Poe and Richard Gordon have been made co-authors of the measure that seeks to amend Section 27(B) of the National Internal Revenue Code, as amended.
“How can you not support a measure that is fair and just, and corrects an injustice to private schools?” asked Angara.
“The bottomline is that private schools have been paying for more than a half-a-century a preferential tax rate of 10 percent, so how could a law that cuts taxes for all corporations instead increases by 150 percent the taxes private schools pay?” Angara added.
Apart from the personnel of the private schools, the livelihood of numerous small and medium businesses linked to these schools would also be adversely affected.
Meanwhile the Action for Economic Reforms (AER) on Tuesday supported the call of senators and the private education sector for the BIR to exclude private schools from the tax increase.
The newly signed Corporate Recovery and Tax Incentives for Enterprises Act, which AER supported, temporarily reduced the tax rates of proprietary educational institutions from 10 percent to 1 percent.
This temporary reduction was designed to lighten the financial burden of schools during the COVID-19 pandemic.
“We urge the Bureau of Internal Revenue and the Department of Finance to immediately rectify this policy for schools to avail themselves of the much-needed 1 percent tax rate. We believe that schools need all the support they can get during this time, and doubling their tax rates will only hurt the sector more,” said the group.