Philippine Local Government Taxation

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Philippine Local Government Taxation

Local government units, by virtue of the 1987 Constitution and the Local Government Code of 1991, otherwise known as Republic Act 7160 have been given the power to raise certain taxes.

Power to Create Sources of Revenue (Sec. 129)

• Each local government unit (LGU) has thepower to create its own sources of revenue and to levy taxes, fees, and charges • The grant of power to create sources of revenue is consistent with the basic policy of local autonomy

• The taxes, fees and charges shall accrue exclusively to the LGU.

Following political subdivisions have the power to tax:

1.) Province
It is the largest unit in the political structure of the Philippines. It consists in varying numbers of municipalities and, in some cases, of component cities. 2.) City
There are three classes of cities in the Philippines: the highly-urbanized, the independent component cities which are independent of the province, and the component cities which are part of the provinces where they are located and subject to their administrative supervision.

3.) Municipality
It is a political corporate body which is endowed with the facilities of a municipal corporation, exercised by and through the municipal government in conformity with law. It is a subsidiary of the province which consists of a number of barangays within its territorial boundaries, one of which is the seat of government found at the town proper. 4.) Barangay

The smallest political unit into which cities and municipalities in the Philippines are divided. It is the basic unit of the Philippine political system. It consists of less than 1,000 inhabitants residing within the territorial limit of a city or municipality and administered by a set of elective officials, headed by a barangay chairman. SEC. 130. Fundamental Principles. - The following fundamental principles shall govern the exercise of the taxing and other revenue-raising powers of local government units:chanrobles virtual law library (a) Taxation shall be uniform in each local government unit; (b) Taxes, fees, charges and other impositions shall:chanrobles virtual law library (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, (e) Each local government unit shall, as far as practicable, evolve a progressive system of taxation.cralaw

Common Revenue-Raising Powers

(1) Service Fees and Charges. - Local government units may impose and collect suchreasonable fees and charges for services rendered. (2) Public Utility Charges. - Local government units may fix the rates for the operation ofpublic utilities owned, operated and maintained by them within their jurisdiction. (3) Toll Fees or Charges. - The sanggunian concerned may prescribe the terms andconditions and fix the rates for the imposition of toll fees or charges for the use of anypublic road, pier or wharf, waterway, bridge, ferry or telecommunication system fundedand constructed by the local government unit concerned: Provided, That no such toll feeso r charges shall be collected from officers and enlisted men of the Armed Forces of thePhilippines and members of the Philippine National Police on mission, post officepersonnel delivering mail, physically-handicapped, and disabled citizens who are sixty-five (65) years or older. When public safety and welfare so requires, the sanggunian...
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