Private school tax relief bill passes Senate on 2nd reading

A BILL which makes explicit the eligibility of private schools for tax relief during the pandemic has passed in the Senate on second reading.

Senator Pilar Juliana S. Cayetano, who chairs the Senate Committee on Ways and Means, on Tuesday sponsored Senate Bill No. 2407, as reported out from committee with some minor modifications. The measure amends Section 27(B) of the National Internal Revenue Code.

The amendment specifically makes private schools qualified to pay a temporarily lower tax rate to help them survive the economic crisis.

Their eligibility had initially been questioned by the Bureau of Internal Revenue, which ruled that only nonprofit private schools were entitled to tax relief. This BIR ruling has since been withdrawn.

Senate President Pro Tempore Ralph G. Recto, a co-sponsor of the bill, noted that it was important to ensure that private schools, which have been severely affected by the pandemic, do not shut down permanently.

“The type of bailout through tax relief is more economical on the part of the government than letting private schools close, as the latter would trigger a migration of refugees to public schools whose education must now be shouldered by taxpayers,” he said.

The Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act had provided for a concessionary tax rate of 1% for enterprises hit hard by the pandemic between July 2020 and June 2023. The withdrawn BIR ruling would have forced public schools to pay the regular corporate tax rate of 25%.

“This bill (removes) the vagueness caused by a missing comma,” Mr. Recto told the plenary. “Another reminder that when crafting tax laws, syntax matters.”

“When the language of a tax provision can be subjected to multiple interpretations, citizens and common sense always lose to collections,” he added.

Meanwhile, private schools released a joint statement backing the Senate’s waiver of the period of interpellation and hoped for expedited approval of the measure.

“Help has finally come; we need this more than ever,” the Coordinating Council

of Private Educational Associations (COCOPEA) said.

COCOPEA represents over 2,500 private educational institutions with over 300,000 employees.

“With our enrolment numbers that continue to go down because of the pandemic, this economic and policy intervention from our Senators empowers and uplifts our institutions in taking on the challenges in education particularly the current learning crisis of our students; preparations for reopening of schools to in-person classes; and the need to continuously strengthen our country’s human capital development in response to the fast-evolving digital economy,” it added. —