Private schools appeal for passage of laws to rescind 150% tax hike

Published August 2, 2021, 6:00 AM

by Bernie Cahiles-Magkilat

The Coordinating Council of Private Educational Associations (COCOPEA), which counts over 2,500 private educational institutions as members, called on Congress to immediately support the enactment of two bills to permanently rescind the imposition of 150-percent tax hike on private schools.

COCOPEA made the appeal after the Department of Finance approved on July 27, 2021, the Bureau of Internal Revenue Regulation No. 14-2021 which temporarily suspended the implementation of certain provisions of RR 5-2021 dated April 8, 2021 which increased the tax rate on private schools by 150 percent, from the 10 percent that has been in effect since 1968 to 25 percent, rather than reduce it to 1 percent as envisioned by the CREATE Act.

“We now urgently appeal for the swift approval of Senate Bill 2272 sponsored by Sen. Sonny Angara and supported by 15 senators and House Bill 9596 sponsored by Cong. Joey Salceda, Deputy Speaker Rufus and Rep. Kiko Benitez and co-authored by 57 congressmen,” COCOPEA said in a statement.

Philippine Association of Colleges and University president Dr. Anthony Jose M. Tamayo, who also serves as chairman of COCOPEA, emphasized the urgency of these corrective measures as schools are about to start classes in September.  This is also to address the confusion that the conflicting policies are causing and to alleviate the precarious state of the private education sector consequent to the pandemic crisis, he said.

“It is critical that the bills be passed as soon as possible, before the new school year starts in September. This will allow the private education sector to focus all of our time and resources on our highest priority, the very grave learning crisis that our country is now struggling with, rather than on correcting erroneous interpretations of the law and the Constitution,” COCOPEA said.

COCOPEA Managing Director Atty. Joseph Noel M. Estrada said there is a need to pass these laws because RR 14-2021 issued by the BIR and approved by the DOF just temporarily suspended certain provisions of the controversial RR 5-2021.

RR 14 suspended the following provisions of RR 5-2021: Section 2(C), on the definition of proprietary educational institutions, in so far as it includes therein the phrase, “which are non-profit”; Section 2(E), on the definition of non-profit, in so far as it applies to “proprietary educational institutions”; and Section 3 (B) which provides illustration on the tax treatment of proprietary educational institutions that are non-profit.

“While this latest development is a step forward, the suspension is merely temporary, and, we cannot lose sight of our main objective of pushing for a law to finally remove any doubt as to the right of proprietary educational institutions to the preferential tax rate of 10 percent, which has been in the Tax Code since 1968, and the concessionary tax rate of 1 percent for three years under the CREATE Act, to

provide temporary relief during the pandemic,” Estrada said.

“Without this curative legislation, the suspension may be withdrawn again or reversed anytime by the BIR and DOF given the history of revenue issuances on this matter,” he said.

COCOPEA thanked the legislators from both the House and Senate for calling on the DOF and BIR to suspend RR 5-2021, pending the legislative process.  Rep. Mark Go earlier filed House Resolution 1877 urging the BIR to revoke RR 5-2021, while Senator Frank Drilon strongly urged the DOF to withdraw RR 5-2021.

“We shall remain vigilant on future developments on this important tax policy to ensure our proprietary educational institutions are securely protected from illegal tax burdens. In addition, we shall continue to advocate for the fulfillment of the objectives of the CREATE Act’s  authors: to extend a lifeline to our struggling schools during this pandemic, and guarantee the continuity of learning for our students, jobs for our employees and livelihoods for the many small businesses [e.g. carinderias, tricycle drivers] who are dependent on our schools,” COCOPEA said.

 
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