LOCAL GOVERNMENT

Fiscal autonomy
LGUs have the power to create their own sources of revenue in addition to their equitable share in the
national taxes released by the national government.
Constitution mandates automatic release of the shares of the LGUs in the internal revenue taxes

Fundamental principles
taxation shall be uniform in each LGU
taxes, fees, charges, shall be:
equitable
levied and collected only for public purposes
not unjust, excessive
not contrary to law
collection shall not be let to any private person
revenue collected shall inure solely to the benefit of the LGU levying the tax
each LGU shall evolve a progressive system of taxation

Power to impose a tax

rests with the Sanggunian of the LGU through an ordinance
in issuing a notice of assessment, reference to the local tax ordinance is vital because the power of
LGUs to impose local taxes is exercised through an ordinance.

What LGU cannot levy

income tax except on banks and other financial institutions
DST
taxes on estates, inheritance gifts, legacies
customs duties, registration fees, vessels and wharfage, tonnage dues, and other customs fees
taxes upon goods carried into or out of, or passing through the territorial jurisdictions of LGUs
taxes on agri or aquatic products when sold by marginal farmers or fishermen
taxes on business enterprises certified to by the BI as pioneer or non-pioneer (6 yrs and 4 yrs)
reckoning point for income tax holidays is the commencement of commercial oeprations
excise taxes under NIRC
VAT
taxes on gross receipts of transaction in persons engaged in the transportation of passengers by hire
and common carriers
taxes on premium via reinsurance
taxes for the registration of motor vehicles except tricycles
taxes on PH products actually exported
taxes on countryside and barangay enterprises
taxes of any kind on the national government

Provinces
tax on transfer of real property
tax on business of printing and publication
franchise tax
tax on sand gravel and other quarry resources
professional tax
amusement tax
annual tax for every delivery truck or van of manufacturers or producers, wholesalers of certain
products

Municipalities
businesses
manufacturers, distellers, brewers of liquors, distilled spirits, wines
wholesalers of any article of commerce

exporters, millers, wholesalers of rice, corn, wheat, flour, meat, dairy products, sugar, salt, cooking oil,
 exporters, millers, wholesalers of rice, corn, wheat, flour, meat, dairy products, sugar, salt, cooking oil,
cooking gas, laundry soap, medicine, agri implements, poultry feeds, school supplies, cement,
retailers with gross sales of 400k more/less
contractors/independent contractors
banks and other financial institutions
peddlers engaged in the sale of any merchandise not exceeding 50php per peddler
any business not provided yet
fees and charges on business and occupation
fees fo sealing and licensing of weights and measures
fishery rentals

Payment of business taxes

payable for every separate or distinct establishment
one line of business is not exempt by being conducted with some other business which is liable for
such tax
if there are 2 or more businesses, the tax shall be computed based on the total gross sales of the said
businesses (same tax rate)
if there are 2 or more businesses, the tax shall be separately reported for the purpose of computing the
tax due from each business (diff tax rate)

Cities
may levy taxes which the province or municipality may impose
taxes levied and collected by highly urbanized and independent component cities shall accrue to them

Barangays
taxes on stores or retailers with fixed business establishments
service fees for the use of barangay-owned properties or service facilities such as palay, copra, or
tobacco dryers
barangay clearance
commercial breeding of fighting cocks
places of recreation which charge admission fees
billboards, sign boards, outdoor advertisements

Common Revenue-Raising Powers

service fees and charges
rates for the operation of public utilities owned by them
toll fees for the use of any public road, pier, wharf, waterway

Collection of taxes
all local taxes shall accrue on Jan 1 every year
new taxes or changes in rates shall accrue on the first day of the next quarter following the effectivity of
the ordinance

Time for payment

within the first 20 days of january
sanggunian may extend for justifiable cause but not to exceed six months
surcharge of not exceeding 25% of the amount of taxes may be imposed for non-payment
interests also accrue at a rate not exceeding 2% per month

Civil remedies for collection of revenues

local taxes constitute a super lien enforceable by appropriate admin or judicial action
civil remedies
admin action through distraint of goods
judicial action
[ all of these may be pursued concurrently at the discretion of the LGU]

Taxpayers remedies
Taxpayers remedies
taxes shall be assessed within 5 years from the date they became due
in case of fraud to evade payment, assessment may be made within 10 years from discovery of fraud
taxpayer may protest within 60 days after notice of assessment
local treasurer shall decide within 60 days from filing
taxpayer shall have 30 days from receipt of denial or from lapse of 60 days within which to appeal to the
court

Others
LGUs must conduct public hearings prior to the enactment of tax ordinances
any question on the constitutionality may be raised on appeal within 30 days from effectivity to the SOJ
appeal shall not stay the effectivity of the ordinance
prior payment under protest not required before taxpayer may appeal to SOJ
LGUs ay grant tax exemptions through ordinances