Schools welcome removal of add’l tax in TRAIN 2

A group of Catholic education institutions has welcomed the decision of the House of Representatives to remove a provision that could impose additional taxes on private schools under the second package of the government’s tax reform program.

The Catholic Educational Association of the Philippines (CEAP) said lawmakers approved the proposed amendment of Marikina Rep. Miro Quimbo to remove additional taxation on private schools.

The group earlier questioned a provision in the second Tax Reform for Acceleration and Inclusion (TRAIN) program, also known as the Tax Reform for Attracting Better and High Quality Opportunities (TRABAHO) that amends the current incentive system for private schools.

In the original proposal of the Department of Finance (DOF), only “well-performing” private schools could enjoy a preferential tax rate of 10 percent that currently apply on all for-profit academic institutions.

The DOF said a set of performance criteria will be determined by the Commission on Higher Education and the Department of Education to evaluate private schools for possible tax incentives.

Those who will not meet the criteria will have to pay taxes similar to other corporations.

Finance Undersecretary Karl Chua had earlier said their proposed system of incentives would ensure that private schools provide high quality to education.

He noted the case of one school that enjoyed a preferential tax rate despite failing to pass performance standards.

But according to CEAP legal counsel Joseph Noel Estrada, the DOF and the Bureau of Internal Revenue cannot tie the matter of taxes to school performance.

“Even those who are forprofit, if they will remove the incentive, it should be consistent with the provision of the Constitution which says that the basis for the tax incentive and exemption is the use of the revenues and assets,” he said.

“If (the revenue) is actually directly and exclusively used for education purposes, then it should be given preferential tax rate or an exemption,” he added.

The CEAP yesterday called on the Senate to also remove the said provision in their version of TRAIN 2.