Tuesday, June 17, 2008 Cabaero: Paying taxes By Nini B. Cabaero Beyond 30
THE matter of the non-payment of business taxes by some schools and hospitals in Cebu City is an issue also for the consumers and for transparency in government.
“I don’t understand why they refuse to pay taxes when they make money from their operations,” City Treasurer Tessie Camarillo said in a news report on the failure of these institutions to pay taxes, collectively estimated to run to at least P255 million for obligations from the years 2000 to 2004.
Camarillo’s statement is the question in the minds of those who have availed themselves of and paid for the services in these institutions. It is usual practice for companies to pass on to consumers the amounts needed to pay their taxes. It is usually included in the computation of fees to be charged their customers. If they did, why then could they not pay City Hall?
The Cebu City Government is reportedly eyeing the seizure of properties from the owners of seven proprietary schools and hospitals that have not been paying their business taxes.
These institutions are the Cebu Doctors’ University, Cebu Institute of Technology, Southwestern University, Sacred Heart Hospital, Cebu Doctors’ Hospital, Cebu North General Hospital and Velez General Hospital. They earlier filed a civil case against City Hall and asked the court to declare the amended tax ordinance null and void. Since the court has not granted them injunction, the City Government has continued collecting the tax from them.
The University of Cebu did not join the case against the City but it has an unpaid tax of P91.5 million from 2000 to 2004, the report said.
The tax amount is even lower now than what was earlier charged. In 2007, the City Council amended the Omnibus Tax Code and reduced the tax collected from proprietary schools and hospitals from 2.5 percent of the annual gross sales to P15,000 for the first P1 million in gross sales and three-fourths of one percent for sales in excess of P1 million.
Councilor Jose Daluz III said the taxes, once collected, could be used in improving and increasing basic services to constituents. Daluz heads the City Council committee on budget and finance. With local government units starting to feel the pinch in these times of rising prices of fuel and food, any additional tax revenue would help.
It is within bounds for City Hall to collect taxes from these institutions. We all suffer taxes. Why should they be exempt?
On the part of consumers, those availing themselves of the services of these institutions could question the computation of charges if these included an item for business tax. What is collected from the consumer as tax should be reported and paid to the government as tax. If it is not used to pay the tax, then these institutions could be overcharging their customers.
Thus, the comment of Camarillo that these institutions make money from their operations and use the City’s services for garbage collection, peace and order and traffic management, yet do not pay taxes.
Still, there is something missing in City Hall’s move to collect the taxes and the plan to confiscate the properties and put them on the auction block. Taxes have to be explained. And to understand City Hall’s position, there is the requirement of transparency in government and in the use of funds.
