House panel approves tax exemption on grants, bequests, endowments, donations, contributions made to CHED

The House Committee on Ways and Means passed Monday, August 24 a substitute bill seeking to grant tax exemption on all grants, bequests, endowments, donations and contributions made to the Commission on Higher Education (CHED).

In less than 15 minutes of virtual deliberations, the House panel, chaired by Albay 2nd District Rep. Joey Salceda gave in to the request of Baguio lone District Rep. Mark Go, chairman of the House Committee on Higher and Technical Education to approve the unnumbered substitute bill, which seeks to strengthen the CHED. 

"Apart from harmonizing the existing body of laws pertaining to CHED, and providing it with the necessary powers and functions to be able to achieve its expanded mandate, this bill proposes the rationalization of its present structure,” Go said in his sponsorship speech. 

He said the bill seeks the setting up of the Higher Education Development Trust Fund, formerly called the Higher Education Development Fund. 

According to the House leader, the Trust Fund shall be used equitably among the regions to strengthen higher education institutions and support priority programs, and shall be funded through the government and private contributions. 

"The government contribution shall be sourced from travel tax collections, professional registration fee collections and sales from lotto operations of the PCSO (Philippine Charity Sweepstakes Office),” he said.

Meanwhile, the private portion shall be raised from donations, gifts, and conveyances which the bill proposes to be exempt from the donor’s tax and shall constitute allowable deduction from the income of the donor for income tax purposes, he added.

"My honorable colleagues, we are well aware of the significance of a strong higher education system in building our country. We here in Congress continue to seek necessary reforms, we craft policies that would push forward the quality and accessibility of higher education, and we develop mechanisms in order to promote the welfare of the students and the teaching and non-teaching personnel of schools. As we continue to envision more for Philippine higher education through the laws we create, we need a partner implementing body that is empowered, equipped, and capable of turning our vision into reality,” Go said. 

He noted that as per academic year 2018-2019, the number of private higher education institutions (HEIs) has grown to 1,721, while public HEIs can be broken down into 111 state universities and colleges (SUCs), 118 local universities and colleges (LUCs), and 13 other State-run HEIs. 

"All these HEIs cater to 3,212,542 students," he said.

The Salceda panel approved the unnumbered substitute bill, a consolidation of three measures,  with amendments as moved by Nueva Ecija 2nd District Rep. Estrellita Suansing. 

The House panel-approved measure provides that "all grants, bequests, endowments, donations and contributions made to the CHED to be used actually, directly, and exclusively by it shall be exempt from donor’s tax and the same shall be considered as allowable deduction from gross income for purposes of computing the taxable income of the donor, in accordance with the provisions of the National Internal Revenue Code of 1997, as amended. 

The committee also decided that the National Treasurer shall serve as the portfolio manager of the Higher Education Development Trust Fund as proposed under the bill. 

The bill provides that the Trust Fund shall be used exclusively for the strengthening of higher education in all regions of the country.

The Government’s contribution to the Trust Fund shall be the following: the equivalent of 40% annual share on the total gross collections of the travel tax; the equivalent of 30 percent share of the annual collections from the Professional Registration Fee; and the equivalent of one percent of the gross sales of the lotto operation of the PCSO.

Government financing institutions identified and requested by the Commission may contribute to the Trust Fund an amount equivalent to not less than three percent but not more than five percent of their unimpaired surplus realized during the immediately preceding year, as provided for in the bill.

Under the substitute bill, the Trust Fund shall have a private portion to be raised from donations, gifts, and other conveyances including materials, equipment, properties and services by gratuitous title which are exempt from donor’s tax and shall constitute as allowable deduction from the income of the donor for income tax purposes.

The measure authorizes the Commission to have full control of the Trust Fund, subject to existing laws and rules and regulations prescribed by the Commission and to the review by Congress every three years as part of its oversight function.