LTOM Book 2: LGUs Taxing Powers (Sections 37-47)

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Questions and Answers

What is the maximum timeframe for the Sanggunian Panlungsod to return a document with recommendations after receiving an ordinance?

  • 10 days
  • 30 days (correct)
  • 45 days
  • 20 days

What happens if no action is taken by the Sanggunian Panlungsod within 30 days of receiving an ordinance?

  • The ordinance is automatically repealed.
  • The ordinance becomes ineffective.
  • The ordinance is presumed valid. (correct)
  • The ordinance is sent back for revision.

Which of the following does NOT fall under the taxing powers of local government units?

  • Levying taxes imposed by province at prescribed rates
  • Collecting surcharges on late payments
  • Levying taxes on business not exceeding 50% of the maximum rate
  • Levying taxes on personal property (correct)

What is the penalty imposed for late payment of taxes according to the stipulated conditions?

<p>A surcharge of 25% plus 2% monthly interest (C)</p> Signup and view all the answers

When does the TFC accrue according to the regulations provided?

<p>On the 1st day of January (A)</p> Signup and view all the answers

How many consecutive days must a revenue ordinance be published in a local newspaper of general circulation?

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

What action is required if a local treasurer wants to implement a new tax rate?

<p>Collect TFC based on new rates (B)</p> Signup and view all the answers

What is the minimum notice period required before a public hearing for interested parties?

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

What is required for the Sanggunian to approve an ordinance after the local chief executive's veto?

<p>2/3 votes of its members (B)</p> Signup and view all the answers

How long does the Sanggunian have to review tax ordinances for component cities and municipalities?

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

What happens if the Sanggunian does not take action on a resolution within 30 days?

<p>The ordinance is presumed valid (A)</p> Signup and view all the answers

Which document must the Secretary of Sanggunian prepare during a public hearing?

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

What is the publication requirement for tax ordinances after approval by the local chief executive?

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

What is the fundamental principle of taxation for LGUs regarding public purposes?

<p>Taxes must be collected for public purposes only. (C)</p> Signup and view all the answers

How often can LGUs adjust tax rates, and what is the maximum increase allowed?

<p>Every five years with a maximum of 10%. (B)</p> Signup and view all the answers

Who has the authority to impose Tax on Fees and Charges (TFC) within a Local Government Unit?

<p>The Sanggunian. (D)</p> Signup and view all the answers

What is one of the restrictions on taxation imposed upon LGUs?

<p>Taxation must not contravene national economic policies. (C)</p> Signup and view all the answers

What role does the Local Treasurer have during the drafting stage of a local revenue measure?

<p>To assist in the preparation of the drafting of the measure. (C)</p> Signup and view all the answers

Which types of businesses are LGUs prohibited from imposing TFC on?

<p>Businesses reserved for provinces. (A)</p> Signup and view all the answers

In terms of revenue sources, how must the local revenues be generated?

<p>From authorized sources as defined by law. (D)</p> Signup and view all the answers

What is the significance of historical data in the drafting stage of a local revenue measure?

<p>To justify the proposed revenue ordinance based on past collections. (D)</p> Signup and view all the answers

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Flashcards

Barangay Ordinance Review

A barangay ordinance is reviewed by the city council within 30 days. If no action is taken, the ordinance automatically takes effect.

Taxing Power in Metro Manila Municipalities

Municipalities within the Metro Manila Area have limited power to tax businesses, allowing them to charge up to 50% of the maximum rate.

Taxing Powers of Local Governments: Restrictions

Local governments cannot impose taxes on national government agencies, including their income, property, or transactions.

Taxation of Basic Necessities

Local governments, such as provinces, cities, municipalities, and barangays, cannot tax basic necessities like food, medicine, and educational materials.

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Tax Payment Deadline

Tax payments are due on the first 20 days of January every year. A grace period of up to six months is allowed in cases of justifiable reasons.

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LGU Revenue Generation

Local Government Units (LGUs) have the power to create their own sources of revenue and levy taxes, but only from those allowed by law.

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Principles of LGU Taxation

LGUs must follow specific principles when imposing taxes, ensuring fairness, practicality, and public benefit.

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LGU Tax Creation

LGUs can create taxes not listed in the National Internal Revenue Code (NIRC) but must follow specific guidelines.

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LGU Tax Rate Adjustments

The rates of LGUs can be adjusted, but only once every five years and must start with 1% for retailers.

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Valid Tax Ordinances

LGUs are required to create ordinances that are consistent with the Local Government Code and provide clear procedures for generating revenue.

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Role of Local Treasurer

The Local Treasurer plays a crucial role in preparing, supporting, and justifying the proposed tax measures.

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LGU Revenue Measure Process

LGU Revenue measures go through a multi-stage process: drafting, deliberation, and refinement.

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Public hearings in LGU taxation

Public hearings allow residents to provide their input on proposed revenue measures before they are finalized.

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Publication of a Tax Ordinance

An ordinance needs to be published in a newspaper of general circulation for 3 consecutive days and also posted in at least 2 public places to ensure transparency and public awareness.

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Local Treasurer's Role in Ordinance Implementation

The Local Treasurer is responsible for collecting the Tax on Financial/Capital Goods (TFC) based on the rates set in the approved revenue ordinance.

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Written Notice for Public Hearing

Before enacting an ordinance, interested parties must be notified with a written notice at least 10 days prior to the public hearing.

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Public Hearing for Tax Ordinances

A public hearing is mandatory before enacting a tax ordinance. It allows for open discussion, debate, and input from all affected parties.

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Local Chief Executive Approval/Veto

If the Local Chief Executive (LCE) approves the ordinance, they must sign it on each page. The LCE can also veto the ordinance if they disagree with it.

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Sanggunian's Power to Override Veto

The Sanggunian (local legislative body) can overturn the Local Chief Executive's (LCE) veto if at least 2/3 of its members vote in favor of the ordinance.

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Furnishing Copies to Local Treasurer

After approval, tax ordinances and revenue measures are sent to the local treasurer to ensure they are aware of any new rates or regulations.

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Review of Tax Ordinances by Provincial Council

Tax ordinances passed by component cities and municipalities are reviewed by the Sanggunian Panlalawigan (Provincial Council) to ensure consistency with overall provincial policies.

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Study Notes

LTOM Book 2, Sections 37-47: Taxing Powers of LGUs

  • LGUs have power to create revenue sources and levy taxes
  • Local revenues are generated from sources authorized by law
  • All monies received by LGUs are accounted for as local funds

Section 38: Fundamental Principles of Taxing and Revenue Raising Power of LGUs

  • Taxation must be equal and uniform within each LGU
  • Taxation must be equitable and practicable
  • Taxes must only be levied for public purposes
  • Taxes must not be unjust, excessive, or oppressive
  • Taxes cannot violate national economic policy or trade
  • Taxes cannot be collected by private individuals
  • Local taxes cannot be shared with the national government
  • The taxation system must become progressively more equitable

Section 39: Power of LGUs to Levy TFC

  • LGUs can levy taxes not covered under the National Internal Revenue Code (NIRC)
  • Cities and municipalities can levy taxes on businesses, excluding those reserved for provinces

Section 40: Authority to adjust rates

  • Tax rates can be adjusted every 5 years, but not exceeding 10%.
  • Retailer tax adjustments must increase by a minimum of 1%

Section 41: Valid Tax Ordinances and Revenue Measures

  • The Sanggunian has the power to impose taxes
  • Tax ordinances must conform to local government code provisions

Procedures and Role of Local Treasurers

  • Drafting Stage: Local Treasurers collate data, prepare historical data on collections, and assist with preparing the revenue ordinance
  • Deliberation and Refinement Stage: The Sanggunian reviews the ordinance, holds public hearings, and approves it. The Local Treasurer attends to justify the proposed ordinance.
  • Publication Stage: The ordinance is published for 3 consecutive days in a local newspaper and posted in 2 conspicuous public places (3 consecutive days in a general circulation newspaper, same 2 posting requirements).
  • Implementation Stage: The approved ordinance is implemented

Procedural Requirements for a Tax Ordinance and Revenue Measures

  • Written Notice: Notifying affected parties

  • Public Hearing: Meeting, with minutes taken, to continue until full deliberation

  • Approval of Ordinances: The approving local chief executive (LCE) signs each page. Veto by LCE is communicated to the Sanggunian within the appropriate timeframe (15 days in province, 10 days in city/municipality)

  • Publication of Tax Ordinance/Revenue Measures: Publishing within 10 days after approval.

  • Tax Ordinance Review: Components of cities and municipalities review

  • Forwarding Approved Ordinance Copies: Sent in 3 days by the Secretary of the Sanggunian to the proper higher-level Sanggunian (panlalawigan or lungsod).

Taxing Powers of Provinces, Cities and Municipalities

  • Cities: Collect taxes exceeding the province's allowance (without exceeding 50% maximum rate), except for professional/amusement taxes

  • Municipalities (within Manila Area): - Levy taxes on businesses, not exceeding 50% of the maximum rate prescribed - Municipalities can levy taxes prescribed for the province, but no higher

  • Common Limitations: cannot levy income tax, documentary stamp tax, or taxes on estates, inheritances, etc.

Section 47: Collection of Taxes

  • Taxes are paid in quarterly installments by the 20th day of January, with extensions possible up to 6 months.
  • Surcharge of 25% and 2% monthly interest may apply, capped at 36 months.

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