Religious groups with business establishments could be the next target of the government’s revenue-generation drive, after the leadership of the House of Representatives instructed the Department of Finance (DOF) to look into their income-tax declarations.
Speaker Pantaleon D. Alvarez, during the hearing of the House Committee on Ways and Means on the Comprehensive Tax Reform Package, said the Catholic Church and other religious groups should be taxed for running schools and owning other properties, noting that these undertakings are not part of nonstock, nonprofit activities.
“Why don’t we check out if these schools are really nonstock, nonprofit if indeed these are nonstock nonprofit. I think it’s high time we taxed these,” Alvarez told the Cabinet secretaries, particularly Finance Secretary Carlos G. Dominguez III, who attended the lower chamber’s hearing. Alvarez also directed the Bureau of Internal Revenue to submit to the lower house the income-tax returns of schools and other institutions owned and operated by religious groups.
“Those religious schools registered as nonstock, nonprofit and claim exemptions from their income, educational income. Do we even believe them? Any school may register as nonstock, nonprofit so that they don’t need to pay taxes,” he said.
The Speaker, however, denied that he wanted to impose taxes on religious institution following criticism from Catholic Church against the passage of the death-penalty bill in the lower chamber. Alvarez is the principal author of the death-penalty bill.
“These schools don’t cater to the poor. They always increase their tuition fees.
“That’s not nonstock, nonprofit; that’s profitable business,” he said.
Alvarez said other private schools impose lower tuition but they pay taxes to the government.
“Why are these schools run by religious institutions, which impose expensive tuition fees, are exempted from income tax? Isn’t that unfair to other private schools?” he said.
Dominguez, however, recognized the 1987 Constitution provides tax exemptions to charitable institutions and churches.
Under Section 28, Article VI of the Constitution, charitable institutions, churches and parsonages or convents appurtenant thereto, mosques, nonprofit cemeteries and all lands, buildings and improvements, actually, directly and exclusively used for religious, charitable, or educational purposes shall be exempt from taxation.
During the same hearing, Socioeconomic Planning Secretary Ernesto M. Pernia said that, while revenues from tuition are exempted from taxation, “they have revenue from commercial activities. Those are taxed”.
Alvarez said the lower chamber will study and then revisit the constitutional provision exempting religious institutions from taxes.