Alvarez eyes taxing church-run schools

Speaker Pantaleon Alvarez. INQUIRER FILE PHOTO

Speaker Pantaleon Alvarez on Monday said schools run by religious institutions should also be taxed  to improve government’s revenue collection.

In an ambush interview later, Alvarez denied that he wanted to impose taxes on schools run by religious institution as retribution for the Catholic Church  criticizing the government’s brutal narcotics crackdown that has claimed 7,000 lives.

READ: Catholic Church, rights activists rev up drive vs death penalty, killings 

Alvarez raised this possibility during the hearing of the House of Representatives ways and means committee attended by a power house of Cabinet secretaries.

The Cabinet led by Finance Secretary Carlos Dominguez III expressed full support for the administration’s tax reform package that seeks to lower personal income tax, raise excise tax slapped on oil and vehicles, expand the value-added tax (VAT) base, among others.

READ: DOF files tax reform package, seeks reduction in income tax

Alvarez slammed the schools run by religious institutions for claiming to be non-stock and non-profit even while making income from tuition fees.

“Yung religious schools, those registered as non-stock, non-profit. Naniniwala ba tayo dun? Kahit sino pwede magdeclare ng non-stock non-profit para hindi makapagbayad (ng tax),” Alvarez said.

(Those religious schools registered as non-stock, non-profit. Do we even believe them? Any school may register as non-stock non-profit so that they don’t need to pay taxes.)

“Itong mga schools na ito, they dont cater for the poor. Palagi nag-i-increase ng tuition fees yan. Ibig sabihin, hindi yan non-stock non-profit. Profitable business yan,” he added.

(These schools don’t cater to the poor. They always increase their tuition fees. That’s not non-stock non-profit, that’s profitable business.)

Alvarez said it’s high time government look at taxing the income from the tuition fees imposed by these church-run schools.

“Bakit hindi niyo tingnan uli yung non-stock, non-profit, kung totoo ngang non-stock, non-profit. I think it’s high time i-tax natin ang dapat i-tax,” Alvarez said.

(Why don’t we check out if these schools are really non-stock non-profit, if indeed these are non-stock non-profit. I think it’s high time we tax these.)

Dominguez told Alvarez, a lawyer, that the 1987 Constitution expressly provides that Congress is not allowed to tax charitable institutions and churches on its assets and properties used for religious, charitable or educational purposes.

“Anong basis ng not taxing the schools aside from other income, ‘yung income sa tuition fees?” Alvarez asked.

(What’s the basis for not taxing schools aside from their other income from tuition fees?)

Dominguez answered: “It’s in the Constitution, sir.”

According to Section 28 (3) under Article VI or the Legislative Department, “Charitable institutions, churches and parsonages or convents appurtenant thereto, mosques, non-profit cemeteries, and all lands, buildings, and improvements, actually, directly, and exclusively used for religious, charitable, or educational purposes shall be exempt from taxation.”

Socioeconomic planning Secretary Ernesto Pernia corroborated Dominguez’s position that the Constitution prohibits taxing tuition fees of church-run schools.

“Revenue from tuition, they are not taxed. But they have revenue from commercial activities. Those are taxed,” Pernia said.

Dominguez said what is allowed to be taxed are the commercial properties of these schools not used for educational and religious purposes.

READ: It’s official: VAT exemptions on senior citizens, PWDs retained

Alvarez said there is a need to revisit the constitutional provision on not taxing schools run by religious institutions.

He urged the Bureau of Internal Revenue to submit to the lower house the income tax returns of these schools.

Alvarez said there is also a need to look into the shares of stocks of religious institutions that run up to billions of pesos.

BIR commissioner Caesar Dulay said these income tax returns will have to be tackled in an executive session.

READ: Dominguez allays fears on negative impact of auto excise tax hike 

After the hearing, Alvarez said it is unfair that church-run schools are not taxed on their income even though these impose more expensive tuition fees than other private schools.

“Yung mga ibang private schools mababa ‘yung tuition pero bakit pinagbabayad natin sila ng tax dun sa income nila sa eskwelahan. Pero bakit itong mga run by religious institutions ang mamahal nung mga tuition fees tapos libre yung income tax. Hindi ba unfair naman yun sa ibang private schools?” Alvarez said.

(Other private schools impose lower tuition but they pay taxes on their income. Why are these schools run by religious institutions which impose expensive tuition fees exempted from income tax? Isn’t that unfair to other private schools?)

He denied suggesting the imposition of taxes on church-run schools as retribution for the Catholic Church’s criticisms of the administration.

“Inaayos lang natin. Maraming pwedeng sabihin no. Sa akin naman tignan natin from the perspective na inaayos lang natin yung sistema ng taxation,” Alvarez added.

(We are just fixing our taxation system. A lot can be said about it, but we are coming from the perspective that we need to fix our taxation system.) JE/rga