Don’t let private education bite the dust

Edwin Santiago, Fellow and Member of the Editorial Board, Stratbase ADR Institute

By this time, it has become a cliché to say that the COVID-19 pandemic has changed a lot of things in our lives. Latest figures put the number of cases worldwide at 216 million and the deaths at 4.5 million. These rising numbers undoubtedly conjure images of a war, more so if we consider the major disruption in our so-called normal lives — from restrictions on physical mobility to a major economic decline.

Normally, at about this time of the year, there is a jovial and festive mood in our country as we usher in the so-called “-ber” months that signal the longest celebration of the Christmas season anywhere in the world. Vaccine czar Carlito Galvez, Jr. expressed confidence in having a better Christmas for Filipinos. But with the COVID-19 cases on the upswing at record-breaking numbers due to the Delta variant, many are again painting a picture of doom and gloom.

However, there is a growing voice of dissent against putting our lives further on hold. The line that “we must learn to live with COVID-19” is becoming a battle cry for survival. How many more lockdowns can we take? How many more can the government afford? How much can private businesses endure?

Take the case of private schools for instance. Latest figures from the Department of Education (DepEd) revealed a steep drop in enrollment, with only about 314,000 registering compared to the 2 million students who were enrolled in school year 2020-21 when the pandemic hit, and the 4.3 million students the year before that. This situation is a serious cause for alarm as it clearly and convincingly demonstrates the effects of the pandemic on the viability of private educational institutions.

The pandemic has indeed created the largest disruption of education systems according to a United Nations policy brief on education during COVID-19 and beyond, released in August 2020. Last year, based on the DepEd, close to 900 private schools in the country faced closures due to low enrollment and their failure to meet the requirements for distance learning. DepEd Secretary Leonor Briones attributed the lack of enrollees in private schools to the reduced income of parents due to the economic downturn. This assertion is supported by the UN policy brief that says that the direct cause of this school revenue decline is the concomitant drop in individual income brought about by the economic slowdown. When parents have lower income, they find it more difficult to bear the direct costs of education, such as tuition, miscellaneous fees, books and supplies. This situation, in turn, creates a cycle of lower student enrollment and, thus, deeper revenue shortfalls that could eventually lead to school bankruptcy. The survival of private schools hangs by a thread.

Private schools, however, seem to have adapted to online learning and are committed to continue with it, despite the prevailing pandemic. In a statement, the Coordinating Council of Private Educational Associations (COCOPEA) said that its member-schools are resolved to continue with online learning for this school year. The presidents of the associations that comprise COCOPEA agree that the safety of our students and stakeholders at this time of the pandemic is our “paramount concern.” They commit to devote their resources to online learning, including teacher-training and upgrading of their IT infrastructure.

The government’s role now is to serve as the enabler of the private schools’ viability and survival. One major stumbling block for the schools is Revenue Regulation (RR) No. 5-2021 issued by the Bureau of Internal Revenue (BIR) this year that imposes a tax rate of 25% on all private educational institutions. This has become controversial because it represents a whopping 150% increase from the previous 10%.

The BIR suspended certain provisions of RR 5-2021 relating to the controversy in consideration of the deliberations in Congress that would amend the National Internal Revenue Code (NIRC) in order to clarify the definition of proprietary educational institutions and clarify the tax treatment.

The House of Representatives has approved — with 203 affirmative and zero negative votes — a measure on third and final reading to explicitly make private schools eligible for preferential tax rates. House Bill 9913 amends Section 27 (B) of the National Internal Revenue Code of 1997 that will allow private schools to pay a tax rate of 1% between July 1, 2020 and June 30, 2023, as authorized by Republic Act No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law and 10% once the provision expires.

The ball is now in the hands of the Senate’s Ways and Means Committee, chaired by Senator Pia Cayetano. Let us give education the importance it deserves. The future of the country rests largely on the quality of education that we provide our children today.

This article was originally published in BusinessWorld.

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