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RESOURCE GENERATION

MAJOR SOURCES OF INCOME
Article 10 Section 5 of the Constitution
“Each local government unit shall have the power to create its own sources of revenues and to levy
taxes, fees, and charges subject to such guidelines and limitations as the Congress may provide,
consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue
exclusively to the local governments.”
Book II Chapter I Sec. 129 of the Local Government Code of 1991
“Power to Create Sources of Revenue. – Each local government unit shall exercise its power to create
its own sources of revenue and 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.”
Two Main Types:
1.
2.

Revenues – related to taxation
Receipts – non-tax related

Can be categorized:
Regular Income – IRA, taxes, fees and charges which are regularly collected and accrued to the
general fund of the LGU
Non-regular Income – sale of assets, one time revenues
May be:
Internally obtained – includes tax revenues from real property, business and other local taxes;
non-tax receipts from fees and charges, governments business operations and other miscellaneous
income
Externally obtained – includes the Internal Revenue Allotment (IRA), shares under special laws,
grants and aids, and other transfers to LGUs
Income Structure of LGUs
INTERNALLY SOURCED

EXTERNALLY SOURCED

Local Source
Tax Revenue
Real Property Tax
Tax on Business
Other Taxes
Non-Tax Revenues
Regulatory Fees
Service/User Charges
Receipts from Economic Enterprises
Toll Fees
Other Receipts

Share from National Tax Collection
Internal Revenue Allotment
Local Gov’t Stabilization and
Equalization Fund
Local Affirmative Action Project
Priority Development Assistance Fund
Share in National Wealth
Share in Tobacco Excise Tax
Share in Expanded Value Added Tax
Share from Economic Zone
Others
Extraordinary Receipts/Grants/Aids
Grants (Foreign or Domestic)
National Aids
Share from Lotto
Rebates from MMDA Contribution
Other Extraordinary Receipts
Loans and Borrowings
Foreign
Domestic
Bond Floatation
Inter-Local Transfers

12. or other taxes in any form whatever upon such goods or merchandise Taxes. registration fees of vessels (except license fees imposed under Section 149 and Section 150 of the Code). excessive. but not a tax on the business of importing. Section 130 of the Local Government Code requires that these measures are consistent with the following principles: 1. tonnage dues and all other kinds of customs fees. b. charges and other impositions shall in no case be let to any private person. or levy on Philippine export . wharfage on wharves. or confiscatory. fees. fees or charges for the registration of motor vehicles and for the issuance of all kinds of licenses or permits for the driving thereof. 5. fees. and be subject to disposition by. not be contrary to law. be equitable and based as far as practicable on the taxpayer’s ability to pay. The revenue collected pursuant to the provisions of this Code shall inure solely to the benefit of. The collection of local taxes. Income tax. manufacturing or producing said products Percentage tax or value-added tax on sales. Limitations on the Taxing Powers of LGUs (Section 133): 1. evolve a progressive system of taxation. fee. be levied and collected only for public purposes. d. not be unjust. 5. gifts. charges and dues except wharfage on wharves constructed and maintained by the local government unit concerned Taxes. except when levied on banks and other financial institutions Documentary stamp tax Taxes on estates. or charges on petroleum products. 13. national economic policy. fees. or passing through. fees. except tricycles Taxes. legacies and other acquisitions mortis causa. charges and other impositions upon goods carried into or out of. public policy. 132 of the Local Government Code of 1991 Local Taxing Authority . fee. 2. or other charges on Philippine products actually exported except as provided by the Code (the prohibition applies to any local export tax. Each local government unit shall. 6. 9. the territorial jurisdictions of local governments in the guise of charges of wharfage. land or water except as provided by the Code Taxes on premiums paid for reinsurance or retrocession Taxes.The power to impose a tax. fees or charges on agricultural or aquatic products when sold by marginal farmers or fishermen Taxes on business enterprises certified by the Board of Investments as pioneer or non-pioneer for a period of six and four years. the local government unit levying the tax. fees. 7. 4. 4. except as otherwise provided in the Local Government Code Customs duties. fee. from the date of registration Excise taxes on articles enumerated under the National Internal Revenue Code and taxes. c. Taxation shall be uniform in each local government unit. barters or exchanges of goods or services or similar transactions thereof (but not fixed graduated taxes on gross sales or on volume of production) 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. 8. 3. Taxes. as far as practicable. 2. respectively. or charge or to generate revenue under this Code shall be exercised by the Sanggunian of the local government unit concerned through an appropriate ordinance. inheritance. charges and other impositions shall: a. and. oppressive. tolls for bridges or otherwise. or in restraint of trade. charge or other imposition unless otherwise specifically provided herein.LOCAL TAXATION Book II Chapter I Sec. 3. 10. 11.

3. dairy products. fermented liquors. Banks and other financial institutions e. 4. 5. fees or charges of any kind on the National Government. Barangay – 40% Professional tax – not more than ₱300. whichever is higher Tax on business of printing and publication – not exceeding 50% of 1% of the gross annual receipts. Cities: Tax on business: a. assemblers. Cooking oil and cooking gas iv. producers. cigars and cigarettes. soft drinks. fees or charges on duly organized and registered Countryside and Barangay Business Enterprises (RA #6810 – Magna Carta for Countryside and Barangay Business Enterprises) and on cooperatives (RA # 6938 – Cooperative Code of the Philippines) 15. Wholesalers. sand. Taxes. Taxes. and fresh water products. marine. Component City or Municipality – 30% c. rectifiers. fertilizers. Laundry soap. School supplies viii. processors. Rice and corn ii. and local government units TAXING POWERS OF LGUs Provinces 1. Exporters and on manufacturers. Province – 30% b. fee. herbicides and other farm inputs vi. 3. Cement d. except printing and/or publishing of books or other reading materials prescribed by the Department of Education as school texts or references Franchise tax – not exceeding 50% of 1% of the gross annual receipts Sand and gravel tax – not more than 10% of fair market value in the locality per cubic meter of ordinary stones. distillers. millers. Agricultural implements. distributors. meat. detergents and magazines v. 6. and wines or manufacturers of any article of commerce of whatever kind of nature b. includes delivery or distribution of distilled spirits. 7. brewers. its agencies and instrumentalities. locally manufactured. whether in their original state or not iii. distributors. proceeds: a. pesticides.products but not to any local tax.00. sugar. Poultry feeds and other animal feeds vii. wholesalers. processed or preserved food. repackers. Wheat or cassava flour. distilled spirits. Peddlers engaged in the sale of merchandise Fees for sealing and licensing of weights and measures – reasonable rates prescribed by the Sangguniang Bayan Fishery rental or fees and charges . dealers or retailers of essential commodities: i. Tax on transfer of real property ownership – not more than 50% of 1% of the total consideration involved in the acquisition or of the fair market value. gravel. payable annually. and other products as may be determined by the Sangguniang Panlalawigan Municipalities 1. and compounders of liquors. or levy that may be imposed on the business of exporting said products) 14. equipment and post harvest facilities. for professions requiring government examination Amusement tax – not more than 30% of the gross receipts from admission fees Annual fixed tax per delivery truck or van of manufacturers or producers of or dealers in certain products – not exceeding ₱500. insecticides. 2.00. earth and other quarry resources. salt and other agricultural. 2. Manufacturers. or dealers in any article of commerce of whatever kind or nature c.

engaged or doing business in the Philippines to pay an annual community tax of ₱500. Tax and fees on stores or retailers – not more than 1% on gross sales or receipts Service charges for services – regulation or the use of Barangay-owned properties or facilities such as palay.00 of income  Shall not exceed ₱5. On commercial breeding of fighting cocks.000. or o Required by law  Annual community tax of ₱5. ferry or telecommunication system funded and constructed by the LGU concerned  Except officers and enlisted men of the AFP and members of the PNP on mission. copra.00 for every ₱1. or tobacco dryers Barangay Clearance Other fees and charges: a. whether domestic or foreign. 4. or o Engaged in business or occupation. operated and maintained within their jurisdiction TOLL FEES OR CHARGES  For the use of any public road.000.00 or more.000. REAL PROPERTY TAX Real Property Tax  Tax on real property imposed by the LGU  Paid every year so that the LGU will not auction off the property  Should be paid by the owner or administrator of the property . and outdoor advertisements SERVICE FEES AND CHARGES  LGUs may impose and collected such reasonable fees and charges for services rendered PUBLIC UTILITY CHARGES  LGUs may fix the rates for the operation of public utilities owned.00 plus ₱1. neon signs.00 Juridical Persons:  Every corporation no matter how created or organized.00 Exemptions: 1. post office personnel delivering mail. or over who has been: o Regularly employed on a wage or salary. Transient visitors whose stay do not exceed 3 months Proceeds of the tax will to the general funds of the cities. On billboards. physically handicapped. signages.o. and disable citizens who are 65 y. 3. 2. pier or wharf. Diplomatic and consular representatives 2. fees and other impositions that the province or municipality may levy and collect Rates of taxes that the city may levy may exceed the maximum rates allowed for the province or municipality by not more than 50% except the rates of professional and amusement taxes Barangays: 1. cockfights and cockpits b.  The city may levy and collect among others any of the taxes.00 and an annual additional tax which shall not exceed ₱10. or older  May be discontinued when public safety and welfare requires COMMUNITY TAX Individuals:  Required for all citizens 18 y.o. On places of recreation which charge admission fees c.000. municipalities and barangays except a portion which will be given to the general fund of the National Government to cover cost of printing and distribution of the forms and other related expenses. waterway. or o Owns real property with an aggregated assessed value of ₱1. bridge.

35% Third year and thereafter. June 30. the interest at the rate of two percent (2%) per month shall be imposed on the unpaid amount. machinery and equipment 4. September 30 and December 31 If basic RPT is paid in advance. of incorporation. and sports development as determined and approved by the Local School Board (Section 272) Appraisal and Assessment of Real Property (Title II Chapter 2)  All real property. and similar documents. namely: March 31. title of ownership. shall be appraised at the current and fair market value prevailing in the locality  DOF – tasked to promulgate the necessary rules and regulations for the classification. 40% Allocation to Local Government Units (Section 285) a. the Sanggunian concerned may grant a discount not exceeding 20% of the annual tax due (Section 251) In case of failure to pay the basic RPT and other taxes when due. Pollution and environmental protection How to exempt? Section 206 Every person by or for whom real property is declared. city or municipal assessor. certifications and mortgage deeds. NATIONAL ALLOTMENTS LGUs shall have a share in the national internal revenue taxes: (Section 284)    First year of the effectivity of the Code. a sworn statement declaring the true value of their property  Declaration to be filed with the assessor concerned once every 3 years during the period from January 1 to June 30  Persons acquiring real property are also tasked the same within 60 days after the acquisition of the property Exemptions from Real Property Tax: 1. appraisal and assessment of real property  It is the duty of all persons owning or administering real property to prepare or caused to be prepared. Local water utilities. affidavits. Provinces – 23% . the LGU’s may levy and collect an annual tax of 1% which shall be accrued exclusively to the SEF (Section 235)  Proceeds shall be allocated for the operation and maintenance of public schools. bylaws. purchase of books and periodicals. who shall claim tax exemption for such property under this Title shall file with the provincial. until fully paid Special Education Fund (SEF)  In addition to the basic RPT. facilities and equipment. and file with the provincial. Real property owned by the government 2. 30% Second year. contracts. Cooperatives (RA 6938) COOPERATIVE CODE OF THE PHILIPPINES 5.    Payment is due on or before January 31 Option of paying on installment – four quarterly installments shall be due on or before the last day of each quarter. Religious. construction and repair of school buildings. charitable and education institutions 3. educational research. city or municipal assessor within thirty (30) days from the date of the declaration of real property sufficient documentary evidence in support of such claim including corporate charters. regardless if taxable or exempt.

fees. c. interests or fines the GOCC would have paid if it were not otherwise exempt Allocation of shares (Section 292) Province – 20% Component City/Municipality – 45% Barangay – 35% Proceeds from the share of national wealth shall be appropriated to finance local development and livelihood projects (Section 294) CREDIT FINANCING General Policy (Section 296)  Any LGU may create indebtedness and to avail of credit facilities to finance local infrastructure and other socio-economic development projects in accordance with the approved local development plan and public investment program. joint venture or production sharing agreement in the utilization and development of the national wealth within their territorial jurisdiction (Section 290) Share of LGUs from GOCC (Government-Owned or Controlled Corporation) (Section 291) o Based on the preceding fiscal year o From the proceeds derived by any GOCC engaged in the utilization and development of national wealth o Whichever is higher:  1% of the gross sales or receipts  40% of taxes. without need of any further action. d. LGU SHARE IN THE NATIONAL WEALTH    LGUs shall have an equitable share in the proceeds derived from the utilization and development of the national wealth within their respective areas. 40% of the gross collection of preceding fiscal year from: (Section 290) o Mining taxes o Royalties o Forestry charges o Fishery charges o Other taxes. Copies of the development plans shall be furnished to the DILG. including sharing the same with the inhabitants by way of direct benefits (Section 289) In additional to the IRA. Cities – 23% Municipalities – 34% Barangays – 20% Section 286 The share of each local government unit shall be released.b. including related surcharges. city. or fines. and from its share in any co-production. How?  Loans from any government or domestic private bank and other lending institutions (Section 297) . Section 287 Each local government unit shall appropriate in its annual budget no less than 20% of its annual internal revenue allotment for development projects. as the case may be.  An LGU may avail of credit lines from government or private banks and lending institutions for the purpose of stabilizing local finances. including related surcharges. charges and such other fees. directly to the provincial. municipal or Barangay treasurer. or charges. on a quarterly basis within five (5) days after the end of each quarter. interests.

advertisement. at least a third ranking permanent official of the procuring entity other than its head  Officer. deferred payment plan or other financial schemes. and o all other covenants affecting the transaction Publication of Call for Bids (Section 363) o given widest publicity o inform prospective participants in the locality o posting copies in at least 3 public accessible and conspicuous places in the provincial capitol or city. (Section 298) Issue bonds. at least a fifth ranking permanent official representing the finance area of the procuring entity  Officer (provisional member)  Representative from the end user unit (provisional member)  Observers – to enhance the transparency of the process. at least 2.php/lgu-budget-process PROPERTY AND SUPPLY MANAGEMENT General Rules in Procurement and Disposal (Section 356)  Acquisition of supplies shall be through competitive public bidding  Disposal shall be through public auction. distribution of Bidding docs. organize meetings. credits and other forms of indebtedness (Section 300) Loans from funds secured by the National Government from foreign sources (Section 301) Contracts with private individual contractors (Section 302) RESOURCE UTILIZATION AND ACCOUNTABILITY BUDGETING AND THE BUDGET PROCESS Local Finance Committee http://citizenaction. prepare minutes of meetings and resolutions. manage procurement process. (Section 299) Extend loans. debentures. take custody of procurement documents and records.      Supplier’s credit. subject to the rules and regulations of the Central Bank and SEC. subject to applicable rules and regulations        Requisitions prepared by the head of office or department (Section 359) Certificate signed by the Local Budget Officer. acts as center of communications Results of the bidding to be posted publicly as the Call for Bids (Section 365) . Local Accountant and the Local Treasurer showing that appropriation exists and funds are available (Section 360) Approval of the Local Chief Executive (Section 361) Call for Bids/Invitation to Bid (Section 362) o show the complete specifications and technical descriptions of the required supplies o terms and conditions of participation and award o terms of delivery and payment. at least a fifth ranking permanent official representing the legal or administrative area of the procuring entity  Officer. municipal or barangay hall o publication in a newspaper of general circulation Bids and Awards Committee (BAC) – decides winning bids and questions of awards on procurement and disposal of property (Section 364) o At least 5 but not more than 7 members o Composition: (RA 9184 Article V Section 11 – Government Procurement Reform Act)  Chairman.net/index. grants or subsidies to other LGUs in amounts not exceeding their surplus funds (Section 300) LGUs may jointly or severally contract loans. one from a duly recognized private group and another from an NGO  BAC Secretariat – main support unit of the BAC. notes and other obligations.

gov. may be made directly from the exclusive or reputable Philippine distributors or agents subject to certain conditions (Section 370.Lowest      Complying and Responsible Bid (Section 357) / Lowest Calculated Responsive Bidder (RA 9184) Proposal of one who offers the lowest price Meets all the technical specifications and requirements of the supplies desired As a leader in the line of supplies involved Maintains a regular establishment Has complied consistently with previous commitments Procurement without public bidding: (Section 366) 1. will be sold at public auction  May be disposed at a private sale at such a price to be determined by the BAC to be approved by the COA (Section 380)  May be transferred without cost to another office. without justifiable cause to accept the award of contract PhilGEPS (http://philgeps. agency. personnel entrusted with the possession or custody of government property shall be accountable  Buildings and other structures shall be under the accountability and responsibility of the provincial or city general services or the municipal mayor or punong barangay  Every officer accountable for government property shall keep a complete record of all properties and render his accounts therefor semiannually to the provincial or city general services officer or the municipal mayor or punong barangay  Person in actual physical possession of government property shall be responsible for its proper use and care and shall exercise due diligence in the utilization and safekeeping (Section 376) Republic Act 7160.ph/)  Mandated by RA 9184 Article III  To promote transparency and efficiency Property Disposal (Section 379)  Upon application. 371) 5. Local Government Code of 1991 Republic Act 9184. the government property will be inspected and appraised by the provincial. a regular requisition will be drawn immediately after the emergency purchase is made (Section 368) 3. city or municipal auditor or his representative or the COA  If found valueless or useless. Government Procurement Reform Act . repeat orders for regular suppliers. Emergency purchases – needs are exceptionally urgent or absolutely indispensable. Purchase from other government entities – includes units or agencies of foreign governments with which the Philippines maintains diplomatic relations (Section 372) Failure    of Bidding (RA 9184 Article X Section 35) No bids are received No bid qualifies as the LCRB/HRRB Whenever the bidder with the LCRB/HRRB refuses. subdivision or instrumentality of the national government or another local government (Section 381) Accountability for Government Property  Heads of office shall be primarily accountable for all government property assigned or issued to his department or office. made within 3 months from the last procurement of the same item (Section 369) 4. Negotiated purchases – when public biddings have failed for two consecutive times and no suppliers have qualified to participate or win in the biddings. shall be destroyed in the presence of the inspecting officer  If valuable. Direct purchase from manufacturers or exclusive distributors – in case of supplies of foreign origin. Personal canvass of responsible merchants – canvass of three responsible suppliers in the locality provided that purchases do not exceed a specific amount depending on the municipal class (Section 367) 2. only to prevent imminent danger or loss or life or property.

foreclosurephilippines.gov.ph/wp-content/uploads/2015/08/SIE_CY_2004_Volume_1_new.slideshare.org/document/2015/07/27/Palawan/LGU%20Shares%20from%20National%20Wealth2015-DBM.php/lgu-budget-process http://www.net/index.pdf http://www.org/real-property-tax-exemptions-philippines/ http://ph-eiti.net/jsndaan/local-government-taxation-in-the-philippines-presentation http://www.http://blgf.net/clarencejoy/lgu-budgeting-process .slideshare.com/real-property-tax-rpt-philippines/#What_is_Real_Property_Tax http://taxacctgcenter.pdf http://citizenaction.