In a hearing of the House Ways and Means Committee on the tax reform program, Department of Finance House Speaker Pantaleon Alvarez urged Catholic schools to be taxed.
He tipped the Bureau of Internal Revenue to conduct a study on how the government can generate taxes from schools being run by the Catholic church, saying that these schools are profitable businesses.
In response, Finance Secretary Carlos Dominguez III said that the Constitution mandates that charitable institutions such as religious schools are exempt from taxes.
“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. He also suggested to look further into the provision claiming that their tuition rates are even higher than regular private schools.
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.”
However, while it is clear what is stated in the provision, BIR Commissioner Cesar Dulay Jr said that the government had been collecting revenue from commercial activities of such rental of assets of property, and that these institutions pay a minimum tax of about 10 percent.
Alvarez then requested the BIR to submit the income tax returns of religious institutions all over the country in the past three years.