Local Government Taxation: Fundamental Principles Quiz

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Questions and Answers

What is the nature of the taxing power?

Inherent and absolute

Absolute and subject to limitations provided for by law

Not inherent; exercised only if delegated to them by law or Constitution; not absolute (correct)

Exercised only if delegated to them by law or Constitution; absolute and not subject to limitations

What is the basic rationale for the current rule on local taxing power?

To prevent local government units from exercising tax powers

To reserve tax powers exclusively for the State

To limit the viability and self-sufficiency of local government units

To directly grant local government units general and broad tax powers (correct)

What does the State policy declare regarding the territorial and political subdivisions?

They shall enjoy genuine and meaningful local autonomy to attain their fullest development as self-reliant communities (correct)

They should attain development as self-reliant communities without local autonomy

They should not enjoy genuine and meaningful local autonomy

They should not be made more effective partners in the attainment of national goals

What is the purpose of the process of decentralization according to the State policy?

To give more powers, authority, responsibilities, and resources to local government units Signup and view all the answers

What does the text say about the grant of local taxing power under the Local Government Code?

It aims to provide genuine and meaningful local autonomy to enable local government units to attain their fullest development Signup and view all the answers

How does the State ensure the accountability of local government units?

By instituting effective mechanisms of recall, initiative, and referendum Signup and view all the answers

What does the text say about the nature of local taxing power under the present constitutional rule?

"The tax power must be deemed to exist although Congress may provide statutory limitations and guidelines" Signup and view all the answers

What does the text say about double taxation in relation to delegated authority?

"There is no validity to the assertion that delegated authority can be declared unconstitutional on the theory of double taxation" Signup and view all the answers

What are the territorial and political subdivisions of the Republic of the Philippines according to the 1987 Constitution?

Provinces, cities, municipalities, and barangays Signup and view all the answers

Which fundamental principle governs the exercise of the taxing and other revenue-raising powers of local government units?

Taxation shall be uniform in each local government unit Signup and view all the answers

What should taxes, fees, charges, and other impositions be based on, according to the fundamental principles of local government taxation?

Equitable and based on the taxpayer's ability to pay Signup and view all the answers

What must the collection of local taxes, fees, charges, and other impositions not be let to, according to the fundamental principles of local government taxation?

Any private person Signup and view all the answers

To whose benefit should the revenue collected pursuant to the provisions of the LGC inure solely to?

The local government unit levying the tax, fee, charge or other imposition Signup and view all the answers

What system of taxation should each local government unit evolve as far as practicable?

A progressive system of taxation Signup and view all the answers

According to the fundamental principles of local government taxation, what should taxes, fees, charges, and other impositions not be contrary to?

Law, public policy, national economic policy, or in the restraint of trade Signup and view all the answers

What should taxes, fees, charges, and other impositions not be according to the fundamental principles of local government taxation?

Unjust, excessive, oppressive, or confiscatory Signup and view all the answers

What regions are provided with autonomous regions as per the 1987 Constitution?

Muslim Mindanao and the Cordilleras Signup and view all the answers

According to Section 130 of Local Government Code, who shall govern exercising taxing powers?

The following fundamental principles Signup and view all the answers

What is the main objective of the State with regard to local autonomy as stated in the text?

To grant genuine and meaningful local autonomy to territorial and political subdivisions Signup and view all the answers

What mechanism does the State aim to institute for ensuring the accountability of local government units?

Effective mechanisms of recall, initiative, and referendum Signup and view all the answers

What authority is granted to local government units regarding tax exemptions according to the text?

Authority to grant tax exemptions with limitations Signup and view all the answers

What is the impact on tax exemptions or incentives granted to individuals and organizations as per the Local Government Code?

All tax exemptions or incentives are withdrawn upon the effectivity of the Local Government Code Signup and view all the answers

What system does decentralization proceed from according to the State policy mentioned in the text?

From the National Government to local government units Signup and view all the answers

What is the primary purpose of granting local government units general and broad tax powers?

To ensure the self-sufficiency and viability of local government units Signup and view all the answers

In the context of the present constitutional rule, what happens when there is neither a grant nor a prohibition by statute regarding tax power?

The tax power is deemed to exist for local government units Signup and view all the answers

What assertion does the text refute with regard to delegated authority and double taxation?

The delegated authority can be declared unconstitutional due to double taxation Signup and view all the answers

According to the fundamental principles of local government taxation, what should taxes, fees, charges, and other impositions accrue exclusively to?

Local government units Signup and view all the answers

What is the rationale for the current rule on local taxing power as per the text?

Safeguarding the viability and self-sufficiency of local government units Signup and view all the answers

Study Notes

Nature of Taxing Power

Taxing power is a sovereign right exercised by the state to impose and collect taxes for revenue generation.
Local taxing power is aimed at funding local government services and projects.

Rationale for Local Taxing Power

Local taxing power is intended to enhance self-reliance and fiscal autonomy of local government units.
It supports local governments in catering to their unique needs and priorities.

State Policy on Territorial and Political Subdivisions

The State policy acknowledges the importance of strengthening local government structures as territorial and political subdivisions.
It seeks to empower these subdivisions for effective governance and service delivery.

Decentralization Purpose

Decentralization aims to distribute authority, resources, and responsibilities to local governments for improved governance.
It facilitates community involvement and tailored solutions to local issues.

Grant of Local Taxing Power

Local Government Code grants local government units the authority to levy taxes, fees, and charges within their jurisdiction.
This empowerment promotes local financial independence and sustainability.

Accountability of Local Government Units

The State ensures accountability through mechanisms that include transparency in financial operations and regular auditing of local government units.
Local governments are required to provide reports and adhere to regulations governing financial management.

Nature of Local Taxing Power under Constitutional Rule

Local taxing power is designed to be exercised within the framework established by national legislation.
It must align with constitutional guidelines while allowing flexibility for local governance.

Double Taxation and Delegated Authority

Delegated authority does not permit local governments to create double taxation on entities already taxed by the national government.
This principle maintains fairness and avoids taxing the same income or property multiple times.

Territorial and Political Subdivisions of the Philippines

The Republic of the Philippines comprises various territorial and political subdivisions, such as provinces, cities, municipalities, and barangays, as defined by the 1987 Constitution.

Fundamental Principle of Local Taxation

The exercise of taxing power must be guided by the principles of equity, justice, and efficiency.
Taxation should be proportionate to the ability to pay and promote the general welfare of the community.

Basis for Taxes, Fees, and Charges

Taxes, fees, charges, and other impositions should be based on the capacity to pay and the benefits derived from local services.
This principle ensures that taxation is fair and just within the local context.

Limitations on Collection of Local Taxes

Collection of local taxes, fees, and charges must not be left to arbitrary discretion; guidelines must govern the process.
Legal provisions dictate how such collections are to be made.

Revenue Benefits from Local Government Code

Revenue collected under the Local Government Code is intended exclusively to benefit the local government units and their constituents.
This emphasizes local accountability and responsiveness.

Taxation System Development

Local government units should evolve a system of taxation that is fair, equitable, and efficient based on local economic conditions.
Innovation and adaptability in tax systems are encouraged.

Compliance with Legal Framework

Taxes, fees, charges, and other impositions must not contradict national laws and regulations.
Legal compliance ensures uniformity and avoids conflicts in taxing authority.

Characteristics of Taxes, Fees, Charges

Taxes, fees, charges, and other impositions should not be regressive and must conform to principles of fairness and equity.
This approach safeguards the financial well-being of residents.

Autonomous Regions in the Philippines

The 1987 Constitution provides for the establishment of autonomous regions in Mindanao, specifically the Autonomous Region in Muslim Mindanao (ARMM).
These regions are vested with certain degrees of governance autonomy, including fiscal matters.

Governance of Taxing Powers

According to the Local Government Code, local government units are empowered to govern themselves in exercising their taxing powers.
This autonomy fosters responsible local governance.

Objective of State with Local Autonomy

The primary objective is to empower local government units to effectively respond to local needs and enhance citizen participation in governance.
Local autonomy is seen as pivotal for democratic governance and development.

Mechanism for Local Government Accountability

The State aims to implement oversight mechanisms that promote accountability and fiscal responsibility in local government operations.
Regular performance reviews and public reporting are part of this accountability framework.

Authority on Tax Exemptions

Local government units are granted authority to determine and grant tax exemptions within their jurisdictions.
This allows local governments to incentivize development and support local initiatives.

Impact of Tax Exemptions

Tax exemptions or incentives granted must not unduly affect the local government's fiscal capacity or revenue generation.
Balancing incentives with public finance is crucial for sustainable local government operations.

Decentralization Framework

Decentralization is based on a system of governance promoting local decision-making and resource allocation.
It derives from the premise that local governments are best positioned to understand and address community issues.

Purpose of Granting Local Tax Powers

Granting local government units broad tax powers aims to enhance fiscal autonomy and responsibility, empowering them to meet local needs.
It facilitates local initiatives and development projects that resonate with community priorities.

Stipulations Without Statutory Grant

In the absence of a specific grant or prohibition by statute regarding tax power, local government units possess the authority to levy taxes grounded in general law principles.
This fosters flexibility while maintaining compliance with legal frameworks.

Refuting Assertions on Double Taxation

Assertions that suggest local governments can impose double taxation under delegated authority are refuted; such actions compromise fairness in taxation.
Clear definitions of taxing powers guard against conflicting tax impositions.

Exclusive Use of Revenue

Taxes, fees, charges, and other impositions should accrue exclusively to fund local government operations and services.
The focus remains on benefiting the community rather than general or extraneous uses.

Rationale Behind Current Taxing Power Rule

The rationale highlights the necessity for local governments to have the means to raise revenue autonomously, ensuring they can cater effectively to local needs and interests.
This framework supports local self-determination and effective governance.

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Description

Test your knowledge of the fundamental principles governing local government taxation in the Philippines, as specified in the Local Government Code of 1991 and the 1987 Constitution. Explore topics related to territorial and political subdivisions, autonomous regions, and key principles of governance.