Speaker wants income of Catholic schools taxed

MANILA, Philippines - If Speaker Pantaleon Alvarez can have his way, he wants the government to tax the income that Catholic schools are generating from tuition and other fees.

Alvarez yesterday asked the Bureau of Internal Revenue (BIR) to study how the government can collect taxes from schools run by religious institutions, during a hearing of the House ways and means committee on the Department of Finance (DOF)’s tax reform program.

Church officials have been vocal in criticizing the extrajudicial killings attributed to President Duterte’s bloody drug war.

“These schools don’t cater to the poor. They always increase tuition. So that means they’re not non-stock, non-profit. These schools are profitable businesses,” Alvarez said.

Finance Secretary Carlos Dominguez III told lawmakers that charitable institutions such as religious schools are exempt from paying taxes.

Dominguez replied, “It’s in the Constitution.”

Article VI, Section 28 of the 1987 Constitution states that “charitable institutions, churches and convents, 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.”

“Perhaps you can revisit this provision because these religious schools are profitable businesses. In fact, they are expanding and tuition is higher than private schools. That’s unfair,” Alvarez said.

“I think we have to look into that. I think income of religious schools should be taxed,” he added.

BIR Commissioner Cesar Dulay Jr. explained that the government collects revenue from schools from commercial activities such as rental of assets or property.

Dulay said these institutions pay a minimal tax of about 10 percent as reflected in their income tax returns (ITRs).

Alvarez asked the BIR to submit to the House the ITRs of religious institutions in the country in the past three years.

Dulay agreed but requested that the presentation be made during an executive session.

House ways and means panel chairman and Quirino Rep. Karl Cua granted Dulay’s request.

The Speaker also wants to impose taxes on the investments made by priests and bishops.

“They derive their income from investments in big corporations, and also their shares of stocks in various companies,” Alvarez said.