Council hit for delaying Tom's tax cut proposal

Mayor Tomas Osmeña hit the city council anew over "non-action" of his proposal that tax rate imposed on private hospitals and schools be reduced from the existing 2.5 percent to .75 percent of their gross income in response to the clamors of hospital and school administrators that the rate is "excessive."

Aside from his gripes on what he perceived was the lack of sense of urgency by the city council for stalling the enactment of a proposed ordinance on alarm system and another proposed P31 million appropriation for bird flu, the mayor again expressed his disappointment with the city council.

"There seems to be no action on tax rate for schools and hospital. And the council just left it to Pesquera," he said in a news conference last Friday afternoon.

Under the existing Cebu City Omnibus Tax Code, schools and hospitals fall under Section 14, which states that, "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."

"But the 2.5 percent is high and many of the schools and hospitals will scream. Maybe that's what she wants. Many of the schools and hospitals will get angry," he further said.

In a separate interview, city administrator Francisco "Bimbo" Fernandez said it has been since early part of this year when the mayor discussed with the city council his proposal for reduction on tax rate imposed to schools and hospitals from the existing 2.5 percent of their gross receipts to .75 percent.

The mayor wanted the city council to pass an amendatory ordinance of the city's Omnibus Tax Code covering his proposal and for it to be retroactive in nature.

In fact, he told reporters in last Friday's news conference that no penalties shall be collected from hospital and school administrators for their back taxes and that he is willing to even accept payments in installments.

It was in 2000 that the 2.5 percent business tax to be imposed on hospitals and schools was approved but it is only this year that the city is going to collect it.

But with resistance coming from the hospitals and schools operating within the city, the city apparently has difficulties collecting it.

As such, Osmeña said the logic behind the proposal is that he prefers the city to collect small amount but which it can sure collect rather than high tax rates but with less or no collection at all.

However, councilor Jocelyn Pesquera, who is also the chairwoman of the council's committee on budget and finance, filed instead a proposed amendatory ordinance to the Omnibus Tax Ordinance of Cebu City such that service tax shall be collected in place of the existing percentage tax from schools and hospitals.

In her proposed measure, Pesquera said this is to address the concerns of the private school and hospital administrators, which find the present rate excessive.

Acting city treasurer Tessie Camarillo seemed to favor the proposed measure because at present the private schools and hospitals have not been paying business tax, claiming they do not know they are subject to pay such, considering the kind of services they provide.

Under Pesquera's proposed amendatory ordinance, it specifically states that owners or administrators of proprietary schools and hospitals cannot operate without paying the corresponding annual graduated tax.

Should it be approved, Pesquera then cited 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 based on the existing tax rate of 2.5 percent.

The proposed amendatory ordinance is now pending before the committee on budget and finance, through its vice chairman, for study and review. -Cristina C. Birondo