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Saturday, October 15, 2005
School, hospital fees 'will go up'
By Linette C. Ramos
CEBU CITY -- A school and hospital administrator warned that tuition and hospital fees in Cebu City will increase, if the City Council approves an amendatory ordinance prescribing the amount of business tax of all private schools and hospitals.
A city councilor proposed an amendment to the Omnibus Tax Ordinance of Cebu City, which will mean collecting service tax instead of a percentage tax from schools and hospitals.
At present, these institutions fall under "other business establishments," which have to pay 2.5 percent of their gross receipts.
The schools and hospitals find the rate excessive, City Councilor Jocelyn Pesquera said in her proposal.
In a separate interview, City Treasurer Tessie Camarillo said schools and hospitals have not been paying business tax because they claim they do not know they are subject to this, considering the kind of services they provide.
Pesquera's amendment could mean financial worries for students and patients because administrators would just pass on the tax to their clients.
By specifying their inclusion, schools and hospitals will be compelled to pay the business tax, said Dr. Potenciano Larrazabal Jr., president of Cebu Doctors' University (CDU), Cebu Doctors' Hospital, North General Hospital and South General Hospital.
The ordinance will result in higher tuition and hospital fees, Larrazabal said.
The proposed amendments specifically state that owners or administrators of proprietary schools and hospitals cannot operate without paying the corresponding annual graduated tax.
Pesquera said her reason for introducing the amendment is to give these institutions lower tax rates.
Some schools and hospitals, Larrazabal said, have not been paying the business tax since it is not specifically stated in the ordinance that schools and hospitals are included.
"Right now, they have not been collecting from us. They tried to collect from us but there's no ordinance supporting it so we did not pay," Larrazabal told Sun.Star Cebu Friday night.
He said the Garcia administration gave them a tax assessment for their school and hospital in 1997 but they did not pay.
But if Pesquera's amendments are approved by the council, Camarillo said it will be easy for them to collect from the institutions.
"I think the amendments will help us because the tax ordinance will specify schools and hospitals for inclusion. Since they are proprietary, they are subject to tax and that's provided for in the tax ordinance, although they are not specifically mentioned," Camarillo said.
Once a public hearing is held for the proposed ordinance, Larrazabal said he will oppose it.
"We will pass it on to the patients and students in the form of a city tax if they insist on collecting from us," he said in a phone interview.
Larrazabal added: "We'll object vehemently because the cost of tuition and hospital services will definitely increase, even charity services will increase. What kind of a City Government do we have?"
The proposed amendments were referred to the committees on laws and budget and finance, through its vice chairman, for review and comment.
Under the existing Tax Code, schools and hospitals are covered under Section 14: "On any business not otherwise specified under the preceding sections, a percentage tax of two and one-half percent of the gross receipts of the preceding calendar year shall be collected."
During their session last Wednesday, Pesquera proposed amendments that will cover schools and hospitals in the graduated business tax provision, depending on their gross annual sales.
If the ordinance is approved, schools and hospitals with annual gross receipts of P50 million will be paying only P1.25 million in business tax instead of P2.5 million, if the 2.5 percent is to be collected.
Since schools and hospitals are service-oriented establishments and considering the nature of services they provide, "the tax of 2.5 percent of their gross receipts is deemed valid," Camarillo said.
But if the City wants to encourage more students and patients to come to Cebu, as well as encourage school and hospital owners to continue doing business here, the City will have to consider their concerns, Pesquera said.
"It is in the best interest of Cebu City, being the educational center for Visayas and Mindanao, to encourage a favorable educational atmosphere, thus there is a need to address the problem," she said in her resolution. (Sun.Star Cebu/Sunnex)
(October 15, 2005 issue)
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