Angara bill seeks to make tuition fees tax deductible

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Friday, June 20, 2014


DUE to the high cost of tertiary education in the country, Senator Juan Edgardo Angara filed a bill that seeks to allow college tuition and related expenses as tax deductions from the gross income of an individual.

"Access to tertiary education remains problematic and elusive especially to the poor and underprivileged Filipinos. This bill seeks to appease this problem by making tuition and allied expenses tax deductible from the gross income of the taxpayer," he said.

Angara cited an annual poverty indicator survey released by the National Statistics Office in 2011 that shows that six million out of 39 million Filipinos aged between six and 24 are out-of-school youth or those who are not attending formal school or have not finished college or post-secondary courses.

"The same report also indicates that 29 percent of high school graduates could not attend college because of its high cost," added Angara, whose advocacy is to broaden access to and improve the quality of education in the country.

Angara's Senate Bill 2228 aims to amend Section 34 of the National Internal Revenue Code of the Philippines to include payments for tertiary education tuition and allied educational expenses as allowable deductions in computing taxable income.

Under the proposed measure, educational deductions should not exceed P40,000 for the taxpayer or for each dependent not exceeding four for the taxable year.

The deductions of dependents for tertiary education, which include post secondary courses from higher educational and technical and vocational institutions, must be claimed by only one of the spouses in the case of married individuals.

The purpose of tax deductions is to decrease the taxable income, thereby increasing the net income or the take-home pay of the taxpayers.

"Such initiative is also a way of encouraging the parents to send their children to school and for working students to continue their education because of the tax incentives they could get," said Angara, chair of the committee on ways and means.

The lawmaker noted that in Malaysia, the allowable deduction on educational expense is up to 5,000 ringgit or P69,000 on the income of taxpayer who is enrolled in the tertiary level, and up to 4,000 ringgit or P55,000 on the income of taxpayer whose dependent is over 18 studying in the tertiary level.

Meanwhile, in Thailand, aside from tax deductions, an additional 2,000 baht or P2,700 per child is granted for educational allowance.

In the United States, tuition and related fees deductible is up to a maximum of $4,000 or P176,000 to the income of the taxpayer who shouldered the expense for his/her own, or for the spouse, or for the dependent.

"It is imperative for the State to protect and promote the right of all citizens to quality education as mandated by the Constitution. And given the limitations of government financial assistance such as scholarships, grants and student loans, providing tax deductions is an effective way of helping the poor and underprivileged Filipino families who have to spend a huge part of their small incomes to pay for education," Angara said.

"More importantly, we should not see this proposal as a possible revenue loss for the government. We should look at the bigger picture and think of the additional college graduates our country would produce and the significant contributions they could offer our society," he added. (Camille P. Balagtas/Sunnex)

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