In a recent press release published at the 17th Congress website yesterday (March 6, 2017), House Speaker Pantaleon Alvarez sought for a review of the tax-free privilege of religious educational institutions in the country with an expressed aim that is geared towards the thought of leveling the playing field among private schools.
The proposal was aired during the hearing of the House Committee on Ways and Means directed to the Department of Finance and suggested to revisit the classification of religious institutions as tax free for being non-stock, non-profit institutions.
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.
“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.
I think that Speaker Alvarez is merely voicing-out the frustrations of many families who wanted to provide QUALITY education to their children but could not afford to send them to one because of high tuition fees.
While in the Press Release it was clearly pointed out that the review proposal applies to all religious institutions, one could not help but wonder if it is really directed to Catholic-run schools since majority of the known “expensive” schools here in the Philippines are being run by Catholic groups such as Ateneo, La Salle, San Beda and UST.
I too am a parent of two very bright children and shares the frustration of many Filipino families with regards to the high tuition fees of ALL privately-run educational institutions known for their quality education – and not only those managed by religious groups.
There are two things that I don’t understand with Speaker Alvarez’s recommendation:
- When Speaker Alvarez talks about leveling the playing field with regards to tax-exemption, what does he really mean about that? Who are the Church-run school playing against with here – state-run schools or the other non-religious privately-owned schools?
- What does Speaker Alvarez hope to accomplish by removing the Tax-Exemption of non-profit, non-government Church-run educational institution in the country. Will that move lower the Tuition Fees? Would that assure parents like me quality education for my kids?
I am really confused.
So the first thing I did was to go to a priest who is part of a religious educational institution and I asked him the most basic question – WHY ARE THE TUITION FEES IN YOUR SCHOOL HIGH?
My respondent is Fr. Aelred Nilo, OSB of San Beda, and this is what he told me:
Private Catholic schools are generally managed by private Religious congregations. They are not owned by the Catholic Church per se if you mean the Diocese. As a private Catholic institution, it is funded by itself or the congregation that manages it as its apostolate. Aside from being exempted from tax as provided by the constitution specifically only from tuition fees, its operations are dependent on its income in the tuition. From it, 70% of its tuition fee increase are distributed to salaries, wages and other benefits and the rest (which is often less than 30%) goes to maintenance and development. The cost of studying in a Catholic private school is expensive especially the known ones like Ateneo, UST, La Salle & San Beda, obviously because it goes to its employees and benefits. In addition, the facilities provided are generally of “premium” quality as compared to the public schools. Remember these private institutions are not subsidized by the government.
Reviewing taxes for Catholic schools only shows unfortunately that those in the current seats (congress) manifested their “ignorance” not only with our Constitution but also their malice towards the Catholic Church that actively criticizes the current government. For your information, Catholic schools that earn income from lease pay taxes and this income supports the school to improve its facilities which cannot be totally taken from its tuition. This is what the Congress is ignorant about. They see this Catholic institution as if it is run and managed by the government. These Catholic schools are in fact helping the government for its lack of capacity to cater to its citizens the quality of education they deserve. Thus the private citizens pay for it.
“All revenues and assets of non-stock, non-profit educational institutions used actually, directly, and exclusively for educational purposes shall be exempt from taxes and duties” (Art. XIV, Sec 3). The provision is self-executory.
The same article further states: “Subject to conditions prescribed by law, all grants, endowments, donations, or contribution used actually, directly and exclusively for educational purposes shall be exempt from tax” (Art. XIV, Sec. 4).
So that means, reviewing the tax exemption given to religious educational institutions would actually make sense if your aim is a constitutional amendment – which is not.
In his article today titled “Counterproposal” Fr. Joel Tabora, SJ of Ateneo De Davao University said:
Revenues of non-stock non-profit schools, as all 1500 members schools of the Catholic Educational Association of the Philippines (CEAP) are, do not go to the pockets of individual investors, but are plowed back to improve the educational operation of the school. The quality of among the best schools in the country is supported by the private students and patrons of the schools.
I think it is time to stop bad-mouthing private and Catholic schools for the contribution they are making to Philippine education. Long before the public schools were instituted in the Philippines respectable Catholic schools were operating. Among these were the University of Sto. Tomas (1611), the Ateneo de Manila University (1859) and the Universidad de Sta. Isabel (1867). They operate first and foremost to provide quality Catholic education to their students.
They have operated primarily on the basis of private funds and private support, even though their contribution to quality education for the country is a common good that government ought fund more.
This is the basis for their tax exemption.
In a statement as well, Bishop Pablo Virgilio David also said:
We in the Church would probably not be running schools if only the government could adequately provide quality education for its citizens, especially on primary and secondary levels. The fact is, it cannot. Look how many students are cramped per classroom in public schools. Ask about the huge backlog in the construction of classrooms and the need for more teachers. Ask about the quality of teaching that overworked public school teachers can deliver if the number of students in their care per classroom is double those in private schools. The state’s resources are still not enough to provide decent education to all its citizens.
We always thought we in the Church were doing the government a favor by making quality education available wherever the state is unable to do it adequately. We do not rely on public funds to run our schools!
Contrary to what people think, public schools are not free; they are run with taxpayers’ money. Ask UP how much their budget is, per student. You’ll find out how close it is to the budget DLSU or ADMU spends per student. The difference is: the parents of DLSU or Ateneo students foot the bill for their children’s education. On the other hand, it is the taxpayers who foot much of the bill for students studying in State Universities.
I think we can run schools that cater mainly to the poor if we get full subsidies from the government. (Nevertheless we have Church-run schools for the poor, financed by foundations.) Belgium’s government fully subsidizes even Catholic schools giving quality primary and secondary education, as long as they keep to the state’s standards. Without such subsidies, how else can we give quality education if not by charging tuition fees that could adequately finance school operations? But ask about scholarship grants given by Catholic schools to poor but deserving students through foundations put up by their alumni, you’ll be surprised.
We’re of course happy when public education is upgraded for the benefit of the poor; but let’s not have any illusion about it. It is not free! It is paid for by the public tax payers! And we merely augment the lack when the government cannot adequately provide it. Should they not treat us as their partners/allies rather than as adversaries?
Now with these words in mind, it is clear that my two questions earlier are indeed valid. My realizations are:
- Any review would be futile since the tax exemption provision is etched in the constitution.
- Removing the Tax Exemption in religious educational institutions (if possible) may put some extra income on the government at first but that would not really help the government in its aim of providing its people with quality education – in fact, this act may sever their relationship with partner educational institutions, majority of private schools here in the Philippines are managed by religious groups as a form of service and advocacy – the Philippine government will not be able to possibly handle the education of its people without the help of private and religious groups, this much is clear.
- At the end of my inquiry, two proposals have emerged: First, instead of taxing religious educational institutions, the government should free all QUALITY schools from taxes -even those that are privately-owned and are not tax-exempted (that would definitely level the playing field); and Secondly, the state should SUBSIDIZE all schools (private, public and religious) so that tuition fees are made more affordable!
In conclusion, I found out that QUALITY EDUCATION (whether Private of Public) is really EXPENSIVE and without government SUBSIDY there’s no hope of seeing the Tuition Fees go down in the near future. Lifting the TAX EXEMPTION on these religious educational institutions will NOT increase the quality of education in the Philippines and will NOT provide a sustained increase in revenue for the government, especially when these educational institutions pulls out their support to the government.
Not all problems can be solved by TAXATION – not even the President’s.
So what does Speaker Alvarez really hope to accomplish with his proposal?