Speaker Pantaleon Alvarez of Davao del Norte wants the government to impose income tax on schools run by religious organizations.
Alvarez pitched the idea during a hearing on Monday on the Duterte administration’s tax reform bill that remains stuck at the House Committee on Ways and Means.
“These schools are registered as non-stock, non-profit, so they are exempted from paying taxes for their educational income. But are we going to believe that? These schools always implement tuition increases. They are profitable, they are expanding,” he said.
“Why don’t you revisit that policy, if they are really non-stock, non-profit? I think it’s high time that they should be taxed. [Tuition] is a taxable income,” Alvarez told the committee headed by Dakila Cua of Quirino.
Finance Secretary Carlos Dominguez 3rd said the 1987 Constitution exempts religious schools from paying tax.
Article 6, Section 28 of the 1987 Constitution states that charitable institutions, churches and parsonages or convents appurtenant thereto, mosques, non-profit cemeteries, and all lands, buildings and improvements, actually, directly and exclusively used for religious, charitable or educational purposes are exempt from taxation.
“The general rule is religious institutions’ [revenue from tuition]are exempted from tax. But when they engage in activities that are not connected to their main purpose… we have a Supreme Court decision that says they should pay income taxes,” Dominguez said.
“They have revenue from commercial activities like rental of assets and properties. Those are taxable,” he added.
The Catholic Church has been a staunch critic of the government’s war on drugs that already left at least 7,000 suspected drug suspects dead.
Meanwhile, Alvarez conceded that the pending tax reform bill proposed by the Finance department will have to be amended for it to gain ground.
Under the tax reform measure, those earning P250,000 or less in a year from paying income taxes.
On the flip side, the same bill seeks to increase fuel taxes (P6 per liter for diesel and P10 per liter for gasoline).
The Finance department’s plans to subsidize poor households under the Conditional Cash Transfer program with an additional P300 per month and also subsidize for one year public utility drivers to cushion the impact of higher fuel taxes.