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SOURCE: Press and Public Affairs Bureau

Alvarez: review tax perks of schools run by religious groups
06 March 2017 05:24:38 PM

Speaker Pantaleon Alvarez today sought for a review of the tax-free privilege of religious educational institutions in the country to level the playing field among private schools.

During the hearing of the House Committee on Ways and Means, Alvarez urged the Department of Finance to revisit classification of religious institutions as tax free for being non-stock, non-profit institutions.

“Kahit sino pwedeng mag-declare ng non-stock, non-profit para lang hindi makapagbayad ng ano (tax). But itong mga schools na ito they don’t cater for the poor. Palaging nag-iincrease ng tuition fees yan. So ibig sabihin hindi yan non-stock, non-profit. Profitable business yan, ‘yang mga eskwelahan na yan,” Alvarez said.

He noted that in fact many of these schools run by religious organizations are expanding.

Alvarez said it’s understandable that collections or other incomes from activities directly and exclusively used for religious purposes should be tax free.

“Pero yung income nila doon sa educational institutions, aside from the rentals nung spaces, I think those are taxable income,” Alvarez said.

Finance Secretary Carlos Dominguez III admitted during the hearing that while religious educational institutions pay tax for the revenue they earn from commercial activities such as rentals of their properties, their income from tuition and other fees are tax-free.

In connection with the manifestation of Alvarez, Committee Chairman Rep. Dakila Cua, directed the Bureau of Internal Revenue to submit the tax records in the past previous years of big religious educational institutions in the country.
However, because of the law protecting the identity and other individual taxpayers’ data, Cua said the tax returns will be discussed during an executive session.

In an interview after the hearing, Alvarez stressed that his move has no connection at all with the recent criticisms the Catholic Church has hurled against the administration of Pres. Rodrigo Duterte.

“Hindi naman Katoliko lang. All religious institutions,” Alvarez said.

Such move, according to Alvarez, is motivated purely by the intention to level the playing field for all in similar situations.

“Etong tingnan ninyo: Iyong mga ibang private schools mababa ang tuition pero bakit pinagbabayad natin sila ng tax, doon sa income nila sa eskwelahan? E bakit itong mga run by religious institutions, ang mamahal ng tuition and other fees, tapos libre yung ano, yung income tax?” Alvarez said.

Alvarez said he believes such tax privilege enjoyed by religious educational institution is unfair to other private schools.

While Alvarez admits his move may be interpreted differently by critics, he said he would prefer to look at the situation from the perspective of improving the country’s tax system.