LGUs Taxation Powers and Principles

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Questions and Answers

What is the maximum percentage by which tax rates can be adjusted every 5 years?

  • 15%
  • 10% (correct)
  • 5%
  • 20%

Local governments can share their tax revenues with the national government.

False (B)

What must tax ordinances conform to?

provisions of LGC

Each LGU may levy taxes that are not __________ under the National Internal Revenue Code.

<p>enumerated</p> Signup and view all the answers

Match the following principles of taxation with their descriptions:

<p>Equality and uniformity = All taxpayers should be treated equally. Equitable and practicable = Fair and manageable for taxpayers. Public purposes only = Taxes should fund services that benefit the community. No private collection = Taxes must be collected by authorized public officials.</p> Signup and view all the answers

What is the minimum tax rate that must start for retailers during an adjustment?

<p>1% (D)</p> Signup and view all the answers

All monies officially received by local government units are not required to be accounted for local funds.

<p>False (B)</p> Signup and view all the answers

Who assists in the preparation of the drafting of local revenue measures?

<p>Local Treasurer</p> Signup and view all the answers

What is the time frame in which the Sanggunian Barangay must furnish copies of an approved ordinance to the Sanggunian Panlungsod?

<p>10 days (D)</p> Signup and view all the answers

The ordinance will become effective immediately upon submission to the Sanggunian Panlungsod.

<p>False (B)</p> Signup and view all the answers

What happens if the Sanggunian Panlungsod takes no action on the ordinance within 30 days?

<p>The ordinance is presumed as valid.</p> Signup and view all the answers

The tax period for local taxes shall be the _____ year.

<p>calendar</p> Signup and view all the answers

Match the following tax-related terms with their descriptions:

<p>TFC = Tax due within the first 20 days of January Surcharge = Additional 25% applied to late payments 2% monthly interest = Interest applied on unpaid tax after due date Ordinance effectivity = Involves revision recommendations by the Sanggunian Panlungsod</p> Signup and view all the answers

What is the minimum duration for publication of a tax ordinance in a newspaper of local circulation?

<p>3 consecutive days (C)</p> Signup and view all the answers

The Local Chief Executive (LCE) can veto an ordinance multiple times.

<p>False (B)</p> Signup and view all the answers

What must be done if newspapers are not available for the publication of a revenue ordinance?

<p>Posting in at least 2 conspicuous public places</p> Signup and view all the answers

The ordinance will take effect upon compliance with ______ requirements.

<p>publication</p> Signup and view all the answers

Match the following steps with their correct description:

<p>Written Notice = Informing interested parties about the upcoming hearing Public Hearing = Deliberation that must occur at least 10 days after notice Approval of Ordinance = Sign-off by the Local Chief Executive Review of Ordinances = Examination by Sanggunian Panlalawigan for component cities</p> Signup and view all the answers

What is the time frame for the Sanggunian to approve or disapprove a resolution after receiving an ordinance?

<p>30 days (C)</p> Signup and view all the answers

A public hearing can be conducted no earlier than 5 days after the written notice is sent.

<p>False (B)</p> Signup and view all the answers

What must the Local Treasurer secure after the approval of a revenue ordinance?

<p>Copies of approved revenue ordinances for public dissemination and implementation</p> Signup and view all the answers

Flashcards

LGU Revenue Generation

Each local government unit (LGU) can create its own sources of income and levy taxes, but only within the limitations set by national laws.

Principles of Local Taxation

Taxes must be applied equally to everyone within a specific LGU. They should be fair and manageable, and collected only for public purposes.

Tax Collection Practices

Taxes must be levied and collected with transparency and accountability. Private individuals cannot be responsible for collecting taxes on behalf of the LGU.

Taxing Businesses

City and municipal governments can impose taxes on businesses, except for those specifically reserved for provincial governments.

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Tax Rate Adjustments

Local governments have the power to adjust tax rates every five years, but the increase cannot exceed 10%.

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Role of the Sanggunian

The Sanggunian (local legislative council) is responsible for drafting and approving tax ordinances, which must comply with national laws.

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Local Treasurer's Role

The local treasurer plays a vital role in the drafting and justification of local revenue measures, assisting in data gathering and presenting the proposed ordinance to the Sanggunian.

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Local Revenue Measure Adoption

The process of creating a local tax ordinance includes drafting, deliberation, and approval, with public hearings to gather feedback.

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Revenue Ordinance

A local government's official document that sets tax rates and regulations for revenue generation.

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Publication Stage

The initial phase of a revenue ordinance's journey; it involves disseminating the proposed ordinance to the public.

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Public Hearing

A critical step in the revenue ordinance process where the public can voice their concerns and opinions on the proposed legislation.

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Approval Stage

The process of formalizing and enacting the approved revenue ordinance, involving the signature of the local chief executive (LCE).

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Implementation Stage

The implementation of the newly approved revenue ordinance, including the collection of taxes based on the new rates.

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Local Treasurer

The official tasked with ensuring that approved revenue ordinances are widely disseminated and implemented effectively.

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Ordinance Review

The review of revenue ordinances by higher levels of government to ensure consistency and legality.

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Furnishing Copies

The process of disseminating approved tax ordinances to the Local Treasurer, enabling them to implement and collect taxes based on these regulations.

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Barangay Ordinance Approval Process

A barangay ordinance is sent to the city council for review within 10 days of enactment. The city council has 30 days to provide recommendations for modifications. If no action is taken within 30 days, the ordinance is considered valid.

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Business Tax in Metro Manila Municipalities

Municipalities within the Metro Manila area can charge businesses a tax, but it cannot be more than 50% of the maximum rate allowed.

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Limited Taxing Power of LGUs

Provinces, cities, municipalities, and barangays are restricted from taxing specific things, including income tax.

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Local Tax Payment Schedule

Taxes are typically collected annually, with payment options available in quarterly installments. The deadline for taxes is usually the first 20 days of January, with possible extensions.

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Tax Payment Penalties

Late tax payments can incur surcharges of 25% and a 2% monthly interest penalty, capped at 36 months.

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Study Notes

LGUs Taxing Powers

  • LGUs have the power to create their own revenue sources, levying taxes as authorized by law.
  • Local revenue generation is exclusively for LGUs.
  • All funds received are accounted for locally.

Fundamental Principles of Taxation

  • Taxation is uniform within each LGU.
  • Taxation must be equitable and practical.
  • Taxes are levied for public purposes only.
  • Taxes cannot be unjust, excessive, or confiscatory.
  • Not in contrast to national policies or trade regulations.
  • Local taxes are not shared with the national government.
  • Must progress towards a progressive taxation system.

LGUs Power to Levy Taxes (TFC)

  • LGUs can levy taxes not already covered under the NIRC.
  • Cities/municipalities can impose TFC on businesses, excluding those reserved for provinces.

Adjusting Tax Rates

  • Tax rates can be adjusted every 5 years, with a maximum increase of 10%.
  • For retailers, the minimum tax rate adjustment starts at 1%.

Valid Tax Ordinances and Revenue Measures

  • Sanggunian (local legislative body) has the authority to impose Taxes.
  • Tax ordinances must comply with LGC provisions.

Procedures for Adopting Local Revenue Measures

  • Drafting Stage: Local Treasurers collect historical collection data, and neighboring LGU data, for accurate estimations of increases in revenue. They create the final draft of the ordinance that will be reviewed by the Local Chief Executive (LCE).
  • Deliberation and Refinement Stage: The Sanggunian (local legislative body) reviews the proposed ordinance. Public hearings are held where the Local Treasurer justifies the proposed ordinance.
  • Publication Stage: The proposed ordinance is published in local newspapers for 3 consecutive days and posted in conspicuous public places; if a newspaper isn't available.
  • Implementation Stage: After approval, the Local Treasurer is responsible for disseminating the approved ordinance.

Procedural Requirements for a Tax Ordinance

  • Written notice to affected parties, at least 10 days before the public hearing.
  • Public hearing is mandatory and continues until deliberations are complete.
  • Minutes of the hearing are recorded.
  • The LCE has the power to veto an ordinance and this veto must be communicated to the Sanggunian (Governing Body) within 15 days (province) / 10 days (city or municipality).
  • The LCE can only veto once.
  • The Sanggunian can override the LCE veto with a 2/3 majority vote.
  • Tax ordinance publication and compliance with requirements occur within 10 days of approval.
  • The ordinances related to component municipalities and cities are reviewed by the appropriate bodies (e.g., Sanggunian Panlalawigan for provinces; Sanggunian Panlungsod for cities).
  • Approved ordinances are forwarded to relevant bodies within 3 days.

Taxing Powers of Provinces, Cities, and Municipalities

  • Each level of government (province, city, municipality) has specific tax authority but certain limitations and restrictions apply. Specific types of taxes are allowed at these administrative levels, while other taxes are prohibited.

Collection of Taxes (Section 47)

  • Tax payment is due within 20 days of January (or extended for justifiable reasons for up to 6 months).
  • A 25% surcharge and 2% monthly interest apply if payment is not made on time; maximum time is 36 months to be fully in compliance.

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Related Documents

Local Government Unit (LGU) Taxing Powers PDF

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