Private school associations urged the Senate to expedite the approval of a bill that aims to rectify a Bureau of Internal Revenue regulation imposing a 150-percent increase in taxes in the face of new reports that basic education enrollment in private schools plunged 66 percent from pre-pandemic levels.
“We urge the honorable chairperson of the Senate Committee on Ways and Means, Senator Pia Cayetano, and our good senators to expedite the passage of Senate Bill 2272 introduced by Senator Sonny Angara, which amends Section 27(B) of the National Internal Revenue Code (NIRC) of 1997,” the private schools said in a joint statement.
This would “rectify with finality the flawed interpretation of a provision under the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE Act) by the BIR’s Revenue Regulation 5-2021,” they added.
BIR RR 5-2021 imposes a 150-percent increase in the corporate income of private educational institutions and deprives them of the much-needed tax relief intended by the authors of CREATE in both the Senate and the House of Representatives.
Signatories in the statement include lawyer Joseph Noel M. Estrada, managing director of the Coordinating Council of Private Educational Associations (COCOPEA) and Dr. Anthony Jose M. Tamayo, chairman of COCOPEA and president of Philippine Association of Colleges and Universities (PACU).
“As we start a new school year, the private education sector is in critical state. Based on DepEd’s LIS- Quick Count data as of September 13, enrollment in private schools in Basic Ed for SY 21- 22 is only at 1.443 million, down 57 percent from 3.376 million in SY 20-21, and down 66 percent from 4.305 million in SY 19-20 before the pandemic.
Most private schools won’t be expecting a substantial increase on these numbers from late enrollees, as classes in public schools also begin and many private school students were expected to transfer,” they said.
A survey by COCOPEA, participated in by over 250 member schools, found that more than 80 percent of respondents reported that the economic difficulties of students and their families, and the resulting migration to public schools, state and local universities and colleges are the main drivers of the enrollment declines.
To cope with the steep decline in enrollment, 71 percent of respondent schools are considering the implementation of a “no work, no pay” scheme, and 64 percent are considering the retrenchment of employees to remain afloat.
In addition, 55 percent in the survey are considering the closure of their schools. These closures would be in addition to the 865 private schools that suspended their operations last school year, as reported by the Department of Education.
Rep. Joey Salceda, chairman of the House Committee on Ways and Means, earlier said that if the income tax increase is made effective, this represents about 5.72 percent of compensation income, which could force the already dwindled private education labor force to shed another 21,661 from the 378,637 jobs in the private schools.
On the other hand, applying the CREATE rate of 1 percent until 2023 would allow these schools to save an equivalent of 3.43 percent of compensation expenses, which could help them rehire at least 12,996 teachers at the start of this school year.
To survive this health and economic crisis, the private education sector has initiated all possible measures for the continuity of school operations, but the severe disruptions of the pandemic require the government’s intervention to help many private schools affected by the very low enrollment.
“It is amidst these dire circumstances, and the country’s ongoing learning crisis, that we renew our appeal for the immediate passage of this most important legislative intervention, SB 2272, so that our member educational institutions can give full focus to delivering quality education for our learners, who we must develop to be the future leaders and workforce of our country,” the associations said.
“The country’s human capital depends on the quality of education our learners receive from both public and private educational institutions. This is a complementary role that must be strengthened and will prove critical for recovering from the pandemic, and sustaining Philippine economic growth and global competitiveness,” they said.
The groups said the educational institutions need a stable and enabling policy foundation to continuously produce the manpower with skills that are responsive to a fast-evolving digital economy.
At the same time, the private school groups thanked Senator Sonny Angara for leading the sponsorship of SB 2272, and 13 co-authors who are supporting the call to speedily pass the rectifying legislation to avert the destabilizing repercussions of the onerous provisions of BIR RR 5-2021.
They are Senate Majority Leader Juan Miguel Zubiri, Senate President Pro Tempore Ralph Recto and Senators Joel Villanueva, Nancy Binay, Sherwin Gatchalian, Grace Poe, Richard Gordon, Francis Pangilinan, Risa Hontiveros, Manny Pacquiao, Bong Revilla, Cynthia Villar, and Leila de Lima.
They also thanked Senator Minority Leader Frank Drilon for successfully calling on the BIR to temporarily suspend the implementation of RR 5 – 2021 as well as calling on the Senate to immediately pass SB 2272 and prioritize its passage before tackling the 2022 national budget.
“Finally, we would like to extend our sincere thanks to Senator Pia Cayetano for calling the June 30 hearing of the Senate Ways and Means Committee to discuss SB 2272, and vowing on August 2, to expedite the swift passage of SB 2272 after the transmission to the Senate of the House version of the bill, which was sponsored by Chairman of the House Ways and Means Committee, Congressman Joey Salceda and subsequently approved by the Lower House,” they said.
Cayetano was earlier quoted as saying: “Private schools are the government’s partner in education. This partnership is even more important today, as our nation deals with the COVID – 19 pandemic, which has disrupted our educational system…”
The private school groups said that cognizant of the tight timeline, “we pray that with your continuing support, SB 2272 will be passed into law this month, before Congress breaks in October for the filing of candidacies for the 2022 national elections.”
“The millions of stakeholders of the private education sector and the linked ecosystem that depend on the continuity of our schools, would be deeply grateful to the Senate for its swift and conclusive correction of RR 5 – 2021’s erroneous interpretation of the CREATE Act, which the Senate and the House clearly intended to provide relief to the private school sector amidst the devastating pandemic.”