De Lima files Senate Resolution urging Duterte to suspend new tax imposed on private schools; stresses education is always a worthy social investment

Opposition Senator Leila M. de Lima bewailed the regulation issued by the Bureau of Internal Revenue (BIR) imposing a 25% corporate income tax on private schools.

De Lima filed Senate Resolution (SR) No. 766 urging Mr. Duterte to suspend the implementation of BIR's Revenue Regulation (RR) No. 5-2021, which, in effect, canceled the 1% rate offered by the pandemic rescue package under Republic Act No. 11534, or the "Corporate Recovery and Tax Incentive for Enterprises (CREATE) Act."

"In issuing implementing regulations to enforce provisions of the CREATE Act, the implementing agency must be guided by the purpose for which the measure was legislated," she said.

"However, when the BIR took it upon itself to modify what was not intended to be modified, it turned what was meant to be a form of assistance into an oppressive provision that could lead educational institutions to the brink of extinction," she added.

Section 6 of the CREATE Act amended Section 27 of the National Internal Revenue Code of 1997 (NIRC), thereby granting a tax rate of 1% beginning July 1, 2020 until June 30, 2023 to Proprietary Educational Institutions which are non-profit.

Instead of imposing a 1% rate under the pandemic rescue package of the CREATE Act, RR No. 5-2021 imposed a 25% corporate income tax on private schools.

De Lima, Chairperson of the Senate Committee on Social Justice, Welfare and Rural Development, said "misinterpreting what was otherwise plain and clear runs contrary to the intent of the law and cuts through its very soul".

"Private schools are the State's allies which assist it in carrying out the duty to educate the youth in whose hands the future of this nation depends on. In unduly withdrawing a legislative grant, the disastrous consequences will be so far-reaching that it would essentially lead educational institutions to their demise," she said.

When the BIR inserted the modifier "non-profit schools" in RR No. 5-2021 which cannot be found in the definition of the proprietary schools in the NIRC as amended by the CREATE Act, De Lima said it stepped outside the limits of its power and usurped legislative power, or what is known in law as an ultra vires act.

"While the power to tax has been said to be the power to destroy, the said power must be used justly and not treacherously in order to maintain the public's trust and confidence in the government. It must still be exercised with caution to minimize the injury to the proprietary rights of taxpayers," she said.

Moreover, De Lima stressed that "it behooves upon the Senate to appeal to the President" to suspend the implementation of RR No. 5-2021 while Senate Bill (SB) No. 2272, which seeks to further amend a section of the NIRC to address BIR's faulty interpretation of a provision under CREATE, is being discussed.

"The Senate from which this measure emanated from, and whose intent runs through the veins of the said measure, must assert the spirit of the law. It should not stand idly by while executive agencies substitute the Senate's will and purpose much to the detriment of the people," she said.

"We must not await the further deleterious effects of the regulation to continue to inject its venom which would inevitably cause closures, loss of employment and ultimately injuring the right to education of our youth," she added.

"Pangulong Duterte, hindi po lahat ng mga magulang na nangahas ipasok ang mga anak nila sa 'private schools' ay mga lumalangoy sa pera at hindi naaapektuhan ng paghihirap at kawalang-kasiguraduhan dulot ng pandemya, pati na ng magiging epekto nito sa ekonomiya sa susunod na mga panahon. Karamihan po sa kanila ay ordinaryong mga manggagawa na naghihigpit ng sinturon para lamang mabigyan ng magandang edukasyon ang kanilang mga anak," said the Senator.

"Imbis na gipitin, ito ang panahon para bigyan ng kaluwagan, kapayapaan ng isip at pag-asa ang ating mga kabataang mag-aaral at ang kanilang mga magulang," she added. "After all, the education of the youth is always a good investment for any society to prioritize."

Data from the Department of Education (DepEd) showed that "at least 865 private schools have suspended their operations for this school year due to low enrollment and inability to meet the requirements of learning management systems for the conduct of distance learning."

The same led to the displacement of around 4,400 teachers and forced students to transfer to public schools, according to DepEd.