03 local tax addendum

FELMAN’S “REVIEWER” IN LOC GOV PROF. GISELLA DIZON-REYES LOCAL TAXATION (Taken from 2007 UP Reviewer) I. PRELIMINARIES A. Basic Concepts Governing Law The LGC shall gov ern the exerc ise by PROVI NCES, CITIE S, MUNI CIPALITIES , and BARANGAYS of their revenue raisin g and taxing powers (Sec 128 LGC) Power to Create Sources of Revenue LGUs have the power to create own sources of revenue and to levy taxes, fees, and charges, consistent with local autonomy. Taxes levied accrue exclusively to the local government units. (SEC. 129, LGC) Share in the IRA National internal revenue generall y goes to th e Nati on al Tr easu ry, exce pt amounts se t apart by way of allotment under R.A. 7160 or the Local Government Code of 1991 (Sec. 284, NIRC) Nature of LGU's Taxing Power 1. Not inherent 2. Legi sl ative in nature 3. Exercised only if dele gated by law or the Constitution 4. Not absol ute; sub je ct to limitations provided by law 5. Limi ted by pu bl ic p urpose Interpretation Taxing powers of LGUs are to be liberally construed (Sec. 5(a), LGC) but doubt on the application of a tax ordinance shall be strictly construed against the local government. Tax exemptions are construed strictly against the grantee. Principle of Pre-emption Whe re national governmen t elects to tax a pa rt icul ar area, the del egated power of the LGUs to tax the same field is impliedly limited. Double Taxation Provinces and municipalities cannot impose a tax, which the other may impose through a specific grant of powers Provinces, ci ti es and muni ci pali ti es cannot impose taxes, which the barangay is spe cif ically empowered to impose to the exclusion of all others. B. Fundamental Principl es (UEPI PI) • Taxation shall be Uniform in each local government unit; IRR: the uniformity required is only within the territorial jurisdiction of an LGU. • Taxes, fees, charges and other impositions shall: (EPUC) i. be Equitable and based as far as practicable on the taxpayer's ability to pay; ii. be levied and collected only for Public purposes; iii. not be Unjust, exces sive, oppressive, or confiscatory; iv. not be Contrary to law, public pol icy , national economic pol icy , or in the restraint of trade; v. The collection of local taxes, fees, charges and other imposi ti ons shall not be let to any Private person; vi. The revenue collected shall Inure solely to the benefit of, the local governmen t unit levying the tax, fee, cha rg e or ot he r impo sit io n un le ss otherwise spec ifica lly provi ded herein; and, vii. Each local government unit shall, as far as practi cable, evolve a Progressive sys tem of tax ati on. (SE C. 130, LGC) C. Loc al Taxing Aut hor ity 1. Exercised by the Sanggunian concerned through an appropriate Ordinance. (Sec. 132, LGC) 2. Local chief executives of the LGUs, exc ept the pun ong bar ang ay pos sess veto powers over ordinances or particular items thereof which are either ult ra vi res or pre ju dic ial to pu bli c i

03 local tax addendum

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