CEBU CITY, Philippines - Because private schools and hospitals generate more income than most businesses, they have more reason to be taxed, said Cebu City Mayor Tomas Osmeña.But even then, some of these privately run institutes refuse to pay business taxes, even if this was less than one percent of their income. With the recent failure of seven institutions’ bid to get a tax exemption, Osmeña now eyes seizing properties from these institutions and auction them off to pay for the taxes that they have refused to remit since 2000.
It was the City Treasurer's Office that came up with the plan to seize property. He said that while he does not meddle in the decisions of the treasurer's office, he would support the measures that they propose. “It is the staff of the treasurer and our legal people that will determine what steps to take. Whatever has to be done should be done,” he said. The treasurer's office has determined that these seven institutions owe the city at least P255 million in taxes for 2000 to 2004, excluding penalties for late payment. The city treasurer said the tax owed for the years after 2004 could not be determined because these schools and hospitals have stopped submitting their financial records.
“I run the city professionally despite the non-payment (of taxes) of these accounts. We are the best-run city in terms of our finances among all 136 (local government) units in Region 7,” Osmeña added.
He said there was no reason not to tax schools and hospitals because they receive basic services like trash collection, peace and order and traffic management from the city, just like all other businesses. “The schools are the biggest single cause of traffic (in the city). We have to have traffic enforcers, protect the students from snatchers, we have to collect their garbage. Imagine the garbage the schools produce,” Osmeña said. “At lest 30 percent (of constituents) cannot afford (private) hospitalization. I have to take care of these 30 percent using the one percent tax I am collecting. Is that unfair?” the mayor added. He said that even vendors pay taxes, so there was no reason why bigger institutes like schools and hospitals should not pay taxes when they make huge profits. He also emphasized that many students and patients from these private schools are not even constituents of Cebu City, yet the city has to ensure their safety, collect their garbage and guide them through traffic as well. In 2006, the Cebu City Council passed City Ordinance 113, or the Omnibus Tax Ordinance, to change the tax collected from private schools and hospitals from an amount based on gross total sales to a fixed percentage of 2.5 percent. Three schools and four hospitals opposed the move, finding it “too excessive.” Cebu Doctors University, Cebu Institute of Technology, Southwestern University, Sacred Heart Hospital, Cebu Doctors Hospital, Cebu North General Hospital and Cebu Velez Hospital filed a petition in court to declare the ordinance null and void, also stating that the city government had no power over tax rules set in the Local Government Code. They also asked for an injunction to stop the city from collecting taxes from them. The injunction was recently denied. In July 2007, the City Council amended the city tax ordinance. From a fixed rate of 2.5 percent in annual gross sales, the city would instead collect P15,000 in tax for each P1 million in annual gross sales, and 0.75 percent of all sales in excess of the first P1 million. | 
