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    Isnihaya I. Abubacar
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    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.

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    Local Revenue Generation

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    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.

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    © All Rights Reserved
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    53 views9 pages

    Local Revenue Generation

    Uploaded by

    Isnihaya I. Abubacar
    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.

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    © All Rights Reserved
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    of 9

    LOCAL REVENUE

    GENERATION

    PA 133- Local Public Finance


    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

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