Taxing our Catholic colleges and universities

Taxing our Catholic colleges and universities

SOME points of law must first be clarified.  Colleges and universities run by Catholic congregations and societies enjoy tax exemption in respect to their revenue and assets not because they are Catholic but because the exemption is granted non-stock, non-profit educational institutions!  That is a provision of the Constitution, and if Congress decides to tax our Catholic schools, it must first amend or revise the Constitution!

Whenever the law grants exemptions, there is, somehow, a public purpose to be served to justify such an exemption.  It is the State that the Constitution burdens with providing a “complete” and “adequate” system of education for the citizens.  It is however a fact beyond dispute that state universities and colleges cannot accommodate the humongous numbers seeking admission to higher education.  That is the reason that private higher education institutes are authorized into existence by the State.

I serve as the Vice-President of a state university, and each year, the Cagayan State University receives an appropriation in the national budget in what is known as the General Appropriations Act.  That means that for the crucial needs of the university—paying for the salaries of teachers (tenured professors) and maintenance costs—taxpayers’ money is drawn from.  Truly then, every student of a state college or university is an “iskolar ng bayan”!  (Constructions are another matter.  A special appropriation for capital outlay must be present—which is not always the case).

Private universities and colleges must provide for themselves: that is why they charge fees, and the pricier the professors engaged, the steeper the fees!  And the Constitution grants the exemptions non-stock, non-profit educational institutions enjoy to “incentivize” the opening and operation of private higher education institutions.  Given the costs of real estate—campus and school buildings, the stringent demands of labor law, insofar as employees are concerned, and the multifarious demands of CHED in respect to equipment, laboratory, library and physical plant facilities, it is daunting to open and to manage a private college or university.  This is the reason for the exemption.

Now, if, as “punishment” for the Church’s stubborn—principled—stand against EJKs, the death penalty and other administration measures, the tax exemption is stricken off the books, some schools will inevitably close—and this will not be to the disadvantage of the Catholic Church but to the students and their parents that our Catholic schools presently serve.
“Non-profit” does not mean that the institution should not make a profit.  In corporation law, what it means is that whatever profit is realized cannot be distributed to members or investors, but must be plowed back into operations: maintenance, expansion, enhancement.  This should also be warning against congregations, orders, societies, dioceses that harbor the erroneous belief that they are entitled to a “return-on-investment” by mulcting their colleges and universities of profit earned.  The law does not allow this, and this practice only threatens our credibility.

There is yet one more point.  Our Constitution recognizes the parents’ “primary right” to decide about the education of their children.  However, when the costs of private education—including Catholic education—become prohibitive, then the “right to choose” is illusory.  Tax-exemptions are meant to allow private institutions to keep fees assessed within reachable heights.  Removing the exemptions burdens private higher education institutions even more, and entails higher fees and, as a consequence, less accessibility!

But our Catholic universities and colleges should also be roused from their “comfortable slumber”.  The Church in the Philippines has often announced its “option for the poor”—and this is very difficult to reconcile with the resultant elitism of many of our Catholic universities and colleges.  (Resultant—because elitism is not by design, but comes as a result of the operation of the laws of economics.)  It is very hard to maintain the double speak of professed poverty and adherence to corporate wealth.  I do not have the answer to this dilemma, but I am acutely aware that this nagging problem is there, and is always like some lightning rod that attracts the furious thunderbolts of incensed Jupiters throughout the country’s history! And let’s quit all this talk about “contribution to the Philippine educational system”—because “Philippine educational system” is an abstraction; the poor are concrete persons!

Both sides need to be circumspect and thoughtful, I believe: the State—as it plans to hit back at the Catholic Church by stripping its schools of the exemptions they presently enjoy, and the Church—as it must resolve this painful and sometimes embarrassing dilemma of the option for the poor that it announces and the exclusion of the poor from the top notch universities and colleges that its religious corporations own and administer!