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All it took to ease the tax dispute between the Cebu city government and several private schools and hospitals was for City Hall to agreed to a compromise with one school owner.
Everybody happy? Not yet.
Augusto Go, owner of the University of Cebu, reportedly agreed to pay City Hall at least .75 percent of the business taxes owed from 2007 up to the present with no interest.
Cebu City Mayor Tomas Osmeña agreed to the deal, saying both sides ?had to give up something? in reaching a settlement of sorts.
Go's deal wasn't a complete surprise since the school owner is one of the Cebu supporters for the candidacies of Senators Benigno ?Noynoy? Aquino and Mar Roxas, a team the mayor also backs. What's more important, though, is Go's willingness to talk to other schools and hospitals in striking a compromise with the city.
This looks like a breakthrough in the impasse between City Hall and almost a dozen private schools and hospitals over business taxes.
But one shouldn't expect too much given the remaining time for the year and the preoccupation of city leaders in preparation for the 2010 elections.
So far, the city government didn't do anything drastic other than issue threats against the private establishments, most of whom were steadfast in resisting the payment of business taxes.
With the economic slowdown, schools have been freezing tuition levels just to keep enrollment from dropping. Pressing them on taxes is a serious business expense.
Adopting the rationale that they are non-profit entities, these schools and hospitals have so far resisted efforts by the city to collect business taxes from them to the point of going to court to settle that question.
City Hall at least secured an assurance of discounted tax payments from one of the biggest univeristies. Go's deal may be the key to convince others to find a way out of their tax impasse with the city.
What?s important to resolve is the principle behind the compromise.
Private hospitals and schools are run shrewedly like business enterprises. They don?t just cater to charity cases and scholars; they charge fees to ensure quality service and instruction.
During the legal battle over the years, the schools and hospitals have yet to fully disclose their earnings to bolster their argument of exemption from business taxes.
In the meantime, they benefit from public services like police security, garbage collection and street lighting paid for by taxpayers.
A discounted tax payment scheme may be worked out where both sides make acceptable sacrifices until they find a more lasting agreement about the social and legal obligations of these important institutions.
