Before the pandemic, many Filipino families did not rule out a private school education for their children because of the cost. But as the pandemic raged on, many parents increasingly sought out public schools, unable to afford the price tag of private schools.
Data from the Department Education showed low enrollment from students led to the closure of at least 865 private schools, affecting over 60,000 students and teachers.
We worry about the fate of many private schools that survive on thin financial margins, relying mostly on tuition to make ends meet. The government should help them stay open instead of imposing additional burdens on them.
Three senators recently warned that unless rescinded, the Bureau of Internal Revenue’s “erroneous order” imposing a 25-percent corporate income tax on private schools would force many more private schools to close down permanently.
The Bureau of Internal Revenue had decided with finality to reject the letter-appeal of the Coordinating Council of Private Education Associations opposing BIR’s RR 5-2021. The group wrote the appeal after exhausting legal avenues to have the BIR correct the tax rate.
Prior to the enactment of the Corporate Recovery and Tax Incentives for Enterprises law, proprietary educational institutions had been paying a preferential tax rate of 10 percent since 1968.
Senate President Pro Tempore Ralph Recto described the BIR order as “a flawed interpretation of the CREATE Act.”
“The title alone of the law [CREATE] clearly shows its intention: corporate recovery and tax incentives,” Recto pointed out, airing serious concern raised earlier by Senators Joel Villanueva and Juan Edgardo Angara, who had moved to file a bill redressing BIR’s interpretation of the CREATE law through its implementing rules and regulations (IRR).
Recto asked how, given CREATE’s intent to help businesses recover through tax rate cuts, “can the BIR invoke it to inflict a 150-percent increase on the income tax of private schools, which is directly opposite to what the law clearly intends?”
Recto said CREATE “is meant to bail out distressed private schools. The BIR order further drowns them in a sea of red ink.”
Finance Secretary Carlos Dominguez said he would support whatever amendments are passed by Congress regarding the tax treatment of proprietary educational institutions.
We also support Senator Angara’s amendatory bill. But we also agree with Senator Recto when he said the BIR should just unilaterally withdraw the regulation because it is based on a wrong interpretation of the law.
“It is illogical, absurd and goes against the spirit of the law,” Recto said.
Many Filipino children are already struggling to learn remotely during the pandemic.
The government should not add to the problems of the education sector. It should, in fact, help make education more available and accessible.
Instead of impeding the sustainability of private education, it should help make it more affordable to Filipino families, especially since the students of private schools seem to be outperforming students in public schools.
In the 2018 Program for International Student Assessment (PISA), for instance, Filipino students from private schools averaged 390 points in Reading Literacy in English, which was significantly higher than public school students who averaged 328 points.
The average Mathematical Literacy score of students in private schools – 395 points—was significantly higher than the average score of those in public schools at 343 points.
Students from private schools scored an average of 399 points in Scientific Literacy, which was significantly higher than that of public school students, who averaged 347 points.
The government should thus try to help private schools since they are doing a better job in many areas.
The increasing migration of private school students to the public school system would only overburden the government in the end.
Government policies should support the private school sector, particularly to help solve its problems with dwindling resources and decreasing enrollment.
Private schools are not asking for government subsidies. They are not asking for financial aid for families to access schools they otherwise could not afford.
They are just asking for a fair shake in taxes, for an equitable system that actually cuts tax burdens on the already overburdened, instead of doing the opposite.