"The ball is now in the court of the Senate, however busy it may be."
The Corporate Recovery and Tax Incentives for Enterprises Act, with the clever acronym CREATE, was passed in March year intending to provide tax relief to businesses facing untold difficulty during this pandemic.
For private, for-profit schools, however, the law stands to have the opposite effect.
The Bureau of Internal Revenue, in its Revenue Regulation 5-2021, inserted the word “non-profit” in describing proprietary educational institutions, who are supposed to be included in the tax relief. Under such classification, however, for-profit private schools stand to be taxed a much-higher 25 percent.
According to Anthony Tamayo, PhD, president of the Philippine Association of Colleges and Universities (with 194 member schools) and chairman of the umbrella group, the Coordinating Council of Private Educational Associations of the Philippines (with 2,500 schools), proprietary, for-profit private educational institutions have been paying a preferential 10-percent tax rate since 1968.
With the misclassification, private schools now have to bear a 150-percent increase in tax payments—inconceivable given the financial hardships that schools are facing with the pandemic-induced dip in enrollment.
Tamayo is hopeful the confusion would be settled soon. The BIR, perhaps realizing the error, issued another regulation, RR 14-2021, suspending the implementation of pertinent provisions of the earlier RR “pending passage of such appropriate legislation.” Thus, the problem is not solved—yet. There needs to be clarificatory legislative action from both chambers of Congress.
In fact, House Bill 9913 clarifying that the preferential rate of 10 percent on proprietary educational institutions will be reduced to 1 percent from July 1, 2020 to June 30, 2023, after which the tax rate will be set to 10 percent, was passed last month with 203 votes—no objections or abstentions.
The ball is now in the court of the Senate, Tamayo says. His group is aware that the Senate is preoccupied with many things at the moment, but it would be good if the counterpart measure, Senate Bill 2272, could be acted upon before the end of this month—well before the Senate goes on break and before it becomes busy with budget deliberations and the political circus that comes with next year’s election.
“The pandemic has affected our lives and livelihood significantly,” said Tamayo. As a result of the drop in enrollment, at least 800 private schools have stopped operating. From 4.3 million private school enrollees for school year 2019-2020, the number dipped to 3.3 million for 2020-2021. At the time of our interview, around the time schools were starting the school year 2021-2022, just 498,000 students had enrolled, he said.
“Everyone needs a lifeline and that was the purpose of CREATE in the first place.”
Indeed, the education sector faces numerous setbacks made worse by the challenges brought by the need for online learning. Even before COVID-19, our students had been doing poorly in standard performance examinations compared to the counterparts from other countries.
“School administrators should, at the very least, be able to concentrate on the learning crisis, their mission in molding the minds and character of our young people. If they were to worry about their financial survival, they would begin to cut corners, and the quality of education will suffer further, compromising the development of our human capital.”
This matter should be easy enough to straighten out. It would be a shame—a tragedy—if it weren’t.
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In June, I wrote about the dogs being trained under the SAGIP K9 program of the University of the Philippines. These are scent-trained dogs that will be tapped to help the UP community in case of natural disasters and other emergency situations.
Alas, one of the top performers in the training, General—a two-year-old Aspin faithfully guarding Romulo Hall—was found to have TVT, or transmissible venereal tumor. The chemotherapy and other treatment, medicine, vitamins and supplements come up to about P20,000. General’s handler is a security guard and has no means to fund the treatment.
College of Mass Communication professor Khrysta Imperial Rara, project manager of SAGIP K9, appeals to those who wish to help General. Friends have been helping out but the current total is a measly portion of the needed amount.
Details for donations can be found at https://www.facebook.com/…/pcb…/4524321247631260/.