Taxation for Catholic Schools?

taxation CEAP

Answers to Questions Raised by Ms. Consuelo Marquez of the Staff of The Varsitarian, the official student publication of the University of Santo Tomas

 

  1. Why should the government not impose tax in church-run schools amid clamor from the public that tuition must be lower?

You imply that the public clamor that tuition must be lower should have a bearing on the possible impostion of tax by government on Church-run schools.  But there is no essential connection between tax and tuition in a church-run school.  Tution is part of a contract between a private educational provider and a person seeking education;  here the school and the student agree that for the education the school provides the student will pay tuition.  Since paid tuition and fees enable the school’s provision of competent teachers, appropriate facilieties, adequate libraries, etc, the quality of education is normally conditioned by the amount of tuition and fees paid.  Properly, government should not interfere in this private contract whose educational outcome is a public good.

Tax is what a person or an entity pays as its contribution to funds government uses presumably for the common good.

Church-run schools are tax exempt not because they are Church-run but because they are non-stock, non-profit schools.  They operate as a public service, in contribution to “the complete, adequate and integrated system of education relevant to the needs of people and society (Art. XIV, Sec 2.1) the Constitution mandates the State to provide in recognition of “the right of all citizens to quality education at all levels” (Art. XIV, Sec 1) where public and private schools function in complementarity (Art. XIV, Sec 4).  As non-stock-non-profit schools, no private persons or entities receive private profit from the operation of these schools;  instead, revenues are plowed back into the operation of the school, enhancing the school’s participation in the system of education that is the responsibility of the State to provide.

The tax exemption on the non-stock non-profit school is based, first, already on the contribution of the private entity complementary to the State’s public provision of education, and second, on the fact that the private entity takes no private profit in its operation but plows back revenues to the enhancement of the school in delivering education as a public good.

  1. Are there any other purposes of the tax exemption for church-run schools aside from improving the quality of facilities and teachers’ salary? Why or Why not?

The tax exemption supports the private non-stock non-profit school in playing the complementary role the Constitution foresees for it relative to public schools (cf. Art. XIV, Sec 4.1).  Hence, the Constitution says, “All revenues and assets of non-stock, non profit educational institutions used actually, directly and exclusively for educational pruposes shall be exempt from taxes and duties…” (Art. XIV, Sec 4.3).  The tax exemption, first, helps sustain the school, and second, increases its ability to re-invest revenues into such as improved teacher salaries, faculty development, facilities and the like.

  1. Are there any cases of  church-run schools unable to provide quality education amid the expensive collection of tuition? If so, could this be the reason that church-run schools should not be exempted from taxes?

I have explained the rationale for not taxing church run schools above.

The manner in which they perform is a different issue.  Some schools perform well, others perform poorly.  The taxation proposed is not as a punishment or disincentive for poor performance of some private schools, but a tax for all private schools, including non-stock, non profit schools.  It is a revenue-raising measure which mis-appreciates the support the State should be giving the private schools for easing its constitutionally-imposed burden in providing universal education (cf. Art. XIV Secs 1 and 2).

  1. How can you prove that there would be no corruption or any type of mishandling of funds in church-run schools?

I cannot prove this.  I cannot guarantee this.  Even church-run schools are sometimes prey to inefficient, incompetent or even corrupt people.  The Church-run schools, as all schools, try to minimize this in their operation.  They do so through quality assurance measures, e.g., though adopting procedures for external financial audit, or procedures for accreditation through an external quality assurance agency, e.g. the Philippine Accrediting Association for Schools, Colleges and Universities (PAASCU).

  1. Could you comment on House Speaker’s statement that he referred catholic schools as profitable businesses?

There is a commercial aspect to the operation of even Catholic schools.  If a Catholic school is mismanaged and its losses cannont be arrested, it will close.  Its educational service then ends.  For the continuity of service of a Catholic school, it must be well managed.  I am sure that Speaker Pantaleon Alvarez understands this.  The closure of a good school due to financial mismanagement, or to mis-appreciation of the “business” aspects of the school is disadvantageous to the Philippine “complete, adequate and integrated system of education” foreseen by the Constitution (Art XIV, Sec. 2.1)

But a Catholic school is a non-stock, non-profit operation.  This is different from “a business” whose finality is profit.  Profit goes to the private pockets of owners and investors, which they use for private purposes that have nothing to do with the school.  In itself, profit is not a bad thing.  It can incentivize and enable private investors to run good schools with private money that also contribute to the “complete, adequate and integrated system of education” foreseen by the Constitution (Art XIV, Sec. 2.1).

A Catholic school uses its revenues not for private profit but to improve its operation, to expand its services, provide new courses, engage better teachers, build better facilities, open new campuses, and the like, that benefit its students, ultimately its graduates, and the society they serve.

While a Catholic school may be very successful and have many revenues, it is not a for-profit business nor focused on maximized revenues for the sake of maximized revenues. The revenues of the Catholic school are for the students, the teachers, the graduates and the society that they serve.  Speaker Alvarez may appreciatre that many of the nation’s most successful commercial, professional and political leaders have come from private Catholic schools.  The State invested nothing in these warm-blooded human assets for the nation.

  1. Would you say that religious freedom would be affected if tax-exemption be removed from the church-run schools?

No.  Whether a Catholic school is taxed or not in the Philippines, does not affect the ability of a person to choose and practice one’s religion according to the dictates of his or her conscience.  “The free exercise and enjoyment of religious profession and worship, without discrimination or preference” is an inalienable right guaranteed by Constitution (Article III, Sec. 5).

The removal of tax exemption from a Catholic schools, however, will affect either its very ability to operate, that is, to provide Catholic education to those who wish it, or to improve the provision of Catholic education to those already enjoying it.  On both levels the ultimate responsbility of the State to provide quality education to all Filipinos at all levels would be adversely affected.

In the case of a Catholic higher educational institution, if its operation is threatened or impaired by taxation,  academic freedom would be affected, that is, the untrammeled ability of the school to search for and communicate truth that is guaranteed by the Constition (Art XIV, Sec 5.2).  Institutions were academic freedom is respected in the pursuit of truth, innovation, and the relevance of human activity to the satisfaction of genuine human needs are essential for an increasingly humane and prosperous nation.

  1. If the new charter would impose tax in church-run schools and institutions, how will it affect the country’s education and economic implications in the long run?

Should the new charter impose taxes on Church-run schools and institutions it would either threaten the sustainability not only of Catholic schools but also of Protestant schools or Islamic schools which operate on a non-stock, non-proft basis.  It would also weaken the ability of the schools to re-invest that portion of revenues that is being taxed in the school.  Thus, instead of being encouraged by the State to sustain and improve their operations in the service of the State which is mandated by the Constitution to provide education to all, it is punished by taxes for helping the State to fulfill its duty.  The schools which contribute education to Filipinos at no major cost to the State, since they operate on private money, are forced to close or are hampered in their desire to improve the quality of their education.

Thus, government should think twice before it imposes such burdens on private Catholic schools that they may need to close. Catholic schools, before they are Catholic, are schools, competent in teaching basic education (K-12), or in the delivery of higher humanistic and higher professional disciplines on bachelor’s, master’s and doctoral levels.  Over the centuries these schools, at no major cost to government, have provided Philippine society with educated Filipinos, professionals and leaders.

But Catholic schools are not only schools.  They are Catholic schools.  They provide their learners and students an opportunity not only to learn about God and his relationship to nature and human society, but mediate a real graced experience of Jesus Christ.  For the Philippines this is of value to the majority of its citizens who are baptized, practising and often struggling Catholics.  It is a value to all of society for the values that educated Chrisianity offers to Philippine society:  the respect for the human being in human scoiety, the recognition of the Filpino’s or Filipina’s relation to the Self-revealing Creator in Jesus Christ, the Spirit present in his or her life, and the ethical implications of this for Philippine society, the respect for the environment, “Our Common Home”, as the Creator’s gift to all.  It would not be in the interest of the State and of the comnmon good to harm these Catholic schools through taxation.

What is needed today is not less education, but more access to quality education.  Catholic education delivers quality education in partial implementation of the State’s responsibility to provide a complete, adequate and integrated system of education for all.   It should be supported in this provision, not burdened through short-sighted revenue-raising taxes whose adverse effects may be a more expensive public school system bereft of the complementary innovativeness, quality, and discipline of Catholic schools.  Increased tax revenues may build, build build physical infrastructure (if, as Sen Ralph Recto points out,  the tremendous cost of maintaining the expensive government bureaucracy will allow it!), but the most important guarantee for economic and social success in the future is the quality education of the Filipino genius.

For the reasons I have given you in my answers to your questions, I call on all Catholic schools, their friends and supporters, esp. the Catholic bishops and legislators sensitive to the contribution of private education to the common good, to oppose all new taxes on private education, but esp. on Catholic non-stock-non profit schools.

 

 

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About Joel Tabora, S.J.

Jesuit. Educator
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