House OKs bill on tax relief for public schools on 3rd reading

MANILA – The House of Representatives on Monday overwhelmingly approved on third and final reading a bill that would define the tax rates for proprietary schools to allow them to avail of the 10-percent preferential rate on taxable income.

With 202 affirmative votes, the chamber passed House Bill No. 9913, which seeks to clarify that the preferential tax rate of 10 percent imposed on proprietary educational institutions will be reduced to 1 percent from July 1, 2020 to June 30, 2023, after which the tax rate shall be set to 10 percent under the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE).

Albay Rep. Joey Salceda, author of the bill, said this will constitute a 96 percent tax discount to private schools from 2020 to 2023, and a 60 percent tax discount thereafter.

“That is the largest ever tax cut to any sector ever in the country’s history, and I am proud that we will do it for the sector the Constitution values the most – the education sector,” Salceda said.

The bill is meant to intervene in the implementation of the recent regulation of the Bureau of Internal Revenue (BIR), increasing the tax rate of private educational institutions to 25 percent from 10 percent.

“Unless legislative action is taken, these schools can still be applied a rate of 25 percent or the regular CIT (corporate income tax) rate, from the 10 percent some of them have complied with previously, if not now, then at some future point,” Salceda said.

He noted that the BIR has suspended the implementation of Revenue Regulation No. 5-2021, which would have increased the income tax of private schools from 10 percent to 25 percent by defining proprietary educational institutions as private and non-profit entities.

“Although the rule was suspended, their responsibility under the law has not yet been expunged. So, we still have to address that complication. Besides, they are unable to avail of the 1 percent rate,” Salceda said.

Salceda said enacting the bill into law would help private schools hire more teachers and keep existing staff through tax relief.

“It will help private schools keep their teachers. They already had to fire teachers due to the pandemic. I think the whole committee agrees we should provide them relief,” Salceda said.

He highlighted that applying the reduced 1 percent preferential rate under CREATE until 2023 would allow 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 the next school year.

Salceda also expressed hope that the bill can be transmitted to Malacañang for President Rodrigo Duterte’s signature before the year ends.

“The Senate will not disagree. And I hope they could just adopt the House version, as we do when their version is also acceptable to us. We did so with the POGO tax regime. They could return the favor for the sake of private schools, an extremely crucial sector,” he said.

Bill provides needed stability to education

Coordinating Council of Private Educational Associations (COCOPEA) chairman and Philippine Association of Colleges and Universities (PACU) President Anthony Tamayo said the legislative policy intervention, once enacted into law, will provide the needed stability to education “not only in this time of pandemic but also for generations to come”, as it aligns with all existing and future initiatives to revive the economy.

Tamayo highlighted that the pandemic has affected the viability of private educational institutions.

He cited the Department of Education’s partial data showing that there are only 118,000 enrollees in the private basic education schools, out of 2 million students last academic year 2020-2021.

He said prior to the pandemic in school year 2019-2020, the enrolment in the private basic education schools was at 4.3 million students.

Tamayo stressed the urgency of a policy intervention, as he called on the Senate to pass its own version of the measure.

“We further hope for the prompt action of the Senate on the measure as declared by Sen. Pia Cayetano, the Chair of the Senate Ways and Means Committee as it now shifts the legislative process from the lower House to the Senate,” Tamayo said.