‘Learning crisis’

A brewing crisis affecting the country’s education sector would hopefully be averted by a timely intervention of our lawmakers to correct an interpretation of a tax reform measure they just approved into law. The House committee on ways and means last Monday brought together the chief implementers of Republic Act (RA) 11534, or the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE).

President Rodrigo Duterte signed the CREATE Law only last March 26. But when the Bureau of Internal Revenue (BIR) subsequently issued Revenue Regulation 5-2021, it reclassified the non-profit proprietary education institutions into domestic corporations.

Already in moribund situation, the proprietary education institutions cried for help in a petition filed before the Court of Tax Appeals (CTA). Led by Coordinating Council of Private Educational Associations (COCOPEA) and the Philippine Association of Colleges and Universities (PACU) as petitioners, they all asked CTA for immediate relief from the constitutional and legal infirmities of this BIR regulation.

Unless rectified at the soonest possible time, they fear this BIR Revenue Regulation would inflict more severe damages upon all private schools and thousands of teachers and other workers as well as the parents and students. Taking up their cause in the 18th Congress, the House ways and means committee chaired by Albay Rep. Joey Salceda called for a public hearing last Monday.

Under the tax reform laws that Salceda shepherded in Congress, the CREATE Law cuts corporate income tax rate to 25 percent from the current 30 percent. This is retroactive from July 1, 2020 in a bid to further attract foreign and local investments in the Philippines. As provided for by the CREATE provision, all proprietary educational institutions and non-profit hospitals shall continue to enjoy a 10 percent tax rate and will be eligible for temporary reduction of tax rate to one percent for the next three years.

Before things could get any worse, Senator Edgardo Juan “Sonny” Angara filed Senate Bill 2272. Angara agreed the BIR “erroneously interpreted” Section 27 (B) of the National Internal Revenue Code to the detriment of the affected education sector. Because of the urgency of the matter, Angara disclosed that his fellow senators have joined forces to work together to work for the amendment of this Tax Code to save the country’s educational system from yet another crisis.

Speaking in our Kapihan sa Manila Bay zoom webinar last Wednesday, Sen. Angara told us they would join hands with their House colleagues in the 18th Congress to push for the immediate passage into law of this amendatory bill. Angara noted especially with concern many of the country’s private colleges and universities actually have been reeling from the “double whammy” on their operations.

The first whammy, Angara recalled, these educational institutions suffered financial dislocation with the initial implementation period on the shift to the K to 12 Law that added two more years for secondary education. Despite the State subsidies to students under the Free College law, he rued the second “whammy” came with the outbreak of the coronavirus disease 2019 (COVID-19) pandemic in March last year. Almost half of private-run schools suspended operations, if not totally shut down due to the economic impact of the COVID-19 pandemic resulting to reduction of enrollees.

Angara warned the BIR’s wrong take on the CREATE Law would result to a “third strike” to all the country’s private schools. Using the baseball parlance, Angara this could “strike out” and eliminate many of the remaining proprietary educational institutions in our country.

Angara is simply living up to the legacy of his late namesake father, former Senate president Edgardo J. Angara. As best tribute to his father’s legacy of “giving opportunities through education,” the younger Angara has assumed this as his own mission when he started as Aurora Province Congressman for three terms. Turning 49 years old next month, Angara is now on his second and last term at the Senate.

Since this is a tax measure, Angara’s proposed amendatory bill on the Tax Code must emanate from the House of Representatives. Thankfully, Angara cited, Rep. Salceda already started the ball rolling in Congress. The public hearing was for the consolidated four bills authored by House solons led by Salceda seeking to implement in letter and spirit of RA 11534, or the CREATE Law as originally intended for the education sector.

Angara promised the amendatory bills would be taken up as soon as both chambers resume the third and last regular sessions of the 18th Congress starting on July 26. Angara hopes though President Duterte would certify them as urgent administration measure. He based his optimism after official representatives of Department of Finance (DOF) headed by Secretary Carlos “Sonny” Dominguez and the BIR led by Commissioner Caesar Dulay gave their respective support to the proposed amendatory bills.

“And I am sure Sec. Sonny Dominguez understands the situation of these proprietary educational institutions because he was once connected with the Ateneo de Davao,” Sen. Angara quipped. At the House hearing, both government agencies agreed to endorse the consolidated bills on the condition it won’t be applied retroactively.

Joining us at the Kapihan sa Manila Bay virtual news forum last Wednesday, PACU president Dr. Anthony Tamayo and attorney Joseph Noel Estrada, managing director and official spokesperson of the COCOPEA expressed their gratitude to the immediate and prompt actions taken by the lawmakers led by Sen. Angara and Rep. Salceda. Estrada hopes the proposed amendatory bills would soon be approved into law to help avert the “learning crisis” from getting worse these past few years.

Angara vows to save the country’s future – the Filipino youths from this “learning crisis.”

We only wish Angara could continue to champion the cause for education, perhaps in higher public office – whether he is appointed or elected next year.