Local government units in the Philippines have the authority to generate their own revenue through taxes, fees, and charges according to the Local Government Code of 1991. They can levy taxes as long as they are uniform within the local government, equitable based on ability to pay, levied only for public purposes, and not unjust or confiscatory. However, there are also common limitations on the revenue raising powers of local governments, which include prohibitions on income tax, estate tax, customs duties, and taxes on exported goods, among others.
Local government units in the Philippines have the authority to generate their own revenue through taxes, fees, and charges according to the Local Government Code of 1991. They can levy taxes as long as they are uniform within the local government, equitable based on ability to pay, levied only for public purposes, and not unjust or confiscatory. However, there are also common limitations on the revenue raising powers of local governments, which include prohibitions on income tax, estate tax, customs duties, and taxes on exported goods, among others.
Local government units in the Philippines have the authority to generate their own revenue through taxes, fees, and charges according to the Local Government Code of 1991. They can levy taxes as long as they are uniform within the local government, equitable based on ability to pay, levied only for public purposes, and not unjust or confiscatory. However, there are also common limitations on the revenue raising powers of local governments, which include prohibitions on income tax, estate tax, customs duties, and taxes on exported goods, among others.
Prepared By: Prof. Christine Joy S. Octobre This topic aims to: 1. Discover the available revenue opportunities provided by the Local Government Code of 1991. 2. Discuss the legal basis and appropriated procedures for the extraction of local or internal revenue sources like taxes, fees and charges. Authority to Generate Resources SEC. 129. Power to Create Sources of Revenue Each local government unit shall exercise its power to create its own sources of revenue and to levy taxes, fees, and charges subject to the provisions herein, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the local government units. Fundamental Principles
(a) Taxation shall be uniform in each local government unit;
(b) Taxes, fees, charges and other impositions shall: 1. be equitable and based as far as practicable on the taxpayer's ability to pay; 2. be levied and collected only for public purposes; 3. not be unjust, excessive, oppressive, or confiscatory; 4. not be contrary to law, public policy, national economic policy, or in restraint of trade; (c) The collection of local taxes, fees, charges and other impositions shall in no case be let to any private person;
(d) The revenue collected pursuant to the
provisions of this Code shall inure solely to the benefit of, and be subject to disposition by, the local government unit levying the tax, fee, charge or other imposition unless otherwise specifically provided herein; and, Common Limitations on LGU Revenue Raising Powers Prohibitions Exceptions 1. Income Tax When levied on banks and other financial institutions 2. Documentary Stamp Tax 3. Taxes on estates, inheritance, gifts, When the Code provides otherwise legacies and other acquisitions; 4. Customs duties, registration fees of When wharfage or wharves are vessel and wharfage on wharves, constructed and maintained by the tonnage dues, and all other kinds of local government unit itself out of its customs fees, charges and dues; own fund 5. Taxes, fees and charges and other impositions upon goods carried into or out of, or passing through, the territorial jurisdictions of local government units in the guise of charges for wharfage, tolls for bridges or otherwise, or other taxes, fees or charges in any form whatsoever upon such goods or merchandise; 6. Taxes, fees or charges on agricultural and aquatic products when sold by marginal farmers or fishermen 7. Taxes on business enterprises certified to by the Board of Investments as pioneer or non-pioneer for a period of six (6) and four (4) years, respectively from the date of registration; 8. Excise taxes on articles enumerated under the National Internal Revenue Code, as amended, and taxes, fees or charges on petroleum products; 9. Percentage or value-added tax (VAT) on sales, barters or exchanges or similar transactions on goods or services except as otherwise provided in the code; 10. Taxes on the gross receipts of transportation contractors and persons engaged in the transportation of passengers or freight by hire and common carriers by air, land or water, except as provided in this Code; 11. Taxes on premiums paid by way of reinsurance or retrocession; 12. Taxes, fees or charges for the registration of motor vehicles and for the issuance of all kinds of licenses or permits for the driving thereof, except tricycles; 13. Taxes, fees, or other charges on Philippine products actually exported, except as otherwise provided herein; Have a nice day! Godbless