THE Coordinating Council for Private Educational Associations (Cocopea) appealed to President Rodrigo Duterte to intervene in the implementation of the new regulation of the Bureau of Internal Revenue (BIR) increasing the tax rate of private educational institutions.
"We appeal to you, Mr. President, to make our tax laws consistent with your vision and the constitutional mandate of ensuring access to education for all Filipinos. Specifically, Revenue Regulation (RR) 5-2021 unilaterally and illegally inserted the wording inconsistent with both Section 27 (B) of the Tax Code as amended by the Corporate Recovery and Tax Incentives for Enterprises (Create) Law, and the constitution," the group said in a statement.
RR 5-2021 defined proprietary educational institutions as "any private school, which are non-profit, maintained and administered by private individuals or groups."
In an interview with The Manila Times, Cocopea managing director lawyer Joseph Noel Estrada said it is "a legal impossibility to be a proprietary educational institution and be non-profit at the same time."
Estrada added with the new rule, private schools will have to pay the 25 percent regular corporate tax rate mandated by the Create Law, instead of the one percent tax rate for proprietary educational institutions.
He said this is 150 percent more than the preferential tax rate of 10 percent the schools have been paying since 1968.
"The erroneous provision of RR 5-2021 will add a heavy additional burden to the many stakeholders of the private education sector, at a time when we are already fighting for our survival. Our sector has not yet recovered from the debilitating effects of the K to 12 Law and is in the midst of struggling with the steep drop in enrollment caused by the pandemic. RR 5-2021 will be the straw that breaks the camel's back," the group said.
The BIR has maintained RR 5-2021 is consistent with the Tax Code.
Cocopea set up a petition campaign to gather support for its appeal for Duterte's intervention.
The Cocopea found an ally in Sen. Maria Lourdes Nancy Binay who appealed to the BIR to spare schools from high taxes.
The senator called on the BIR to withdraw the controversial regulation.
In a statement, she pointed out many private schools had to stop operation because of the pandemic.
"If this revenue regulation is implemented, I'm sure more of them will eventually close down. Let us help them to survive. Konting puso naman sana (Please, have a heart)," Binay added.
She said imposing additional taxes on private schools is contrary to the intent of the Create Act which was passed to help ease the effects of the pandemic on businesses through lower corporate income taxes.
"We, in the Senate, believe there was some misinterpretation of the law. We passed the Create Law to help businesses survive the effects of the pandemic through tax incentives," Binay said.
She said the law aimed to create a more equitable tax incentive system that will allow inclusive growth and generate jobs. "It's not the intention of the law to add burden on schools," Binay said.
"In times like this, let's be more sensitive to the struggles our kababayans (fellowmen) are going through," the senator said.
Binay voiced support to Senate Bill 2272 filed by Sen. Juan Edgardo "Sonny" Angara which seeks to amend the National Internal Revenue Code to correct the erroneous interpretation of the tax imposed on proprietary educational institutions.
WITH BERNADETTE E. TAMAYO