Local Government Unit (LGU) Taxing Powers PDF

**LTOM Book 2** **Section 37-47** **Taxing Powers of the LGUs** **Section 37 Power of LGUs to Create Sources of Revenue** 1. Each LGU has the power to create its own sources of revenues and to levy. TFC under the basic policy and accrue exclusively to LGU. 2. Local revenues generated...

**LTOM Book 2** **Section 37-47** **Taxing Powers of the LGUs** **Section 37 Power of LGUs to Create Sources of Revenue** 1. Each LGU has the power to create its own sources of revenues and to levy. TFC under the basic policy and accrue exclusively to LGU. 2. Local revenues generated only from sources authorized by law. 3. All monies officially received by LGUs shall be accounted for local funds. **Section 38 Fundamental Principles of Taxing and other Revenue Raising Power of LGUs** Taxation shall be uniform in each LGU 1. Equality and uniformity 2. Equitable and practicable 3. Levied and collected for public purposes only 4. Not be unjust, excessive, oppressive and confiscatory 5. Not contrary to law , national economic policy or in restraint of trade. 6. Collection of taxes shall not be let to any private person. 7. Local taxes cannot be shared to National Government. 8. Must evolve into progressive system of Taxation. **Section 39 Power of LGUs to Levy TFC** - LGUs may levy TFC not enumerated under the National Internal Revenue Code (NIRC) - City and Municipality may impose TFC on businesses except those reserved to provinces. **Section 40 Authority to Adjust Rates** - Tax rates can be adjusted once every 5 years but not exceeding 10%. - For retailers, adjustment must start with 1% minimum tax rate. **Section 41 Valid Tax Ordinances and Revenue Measures** - Sanggunian has the power to impose TFC. - Tax ordinances must conform to the provisions of LGC. **Procedures and the Role of Local Treasurers in the adoption/Approval of Local Revenue Measures.** 1. **Drafting Stage** -- Draft Local Revenue Measure/Code - Provide historical data on collection and estimated increase - Collate data on existing Revenue ordinance from neighboring LGUs. - Deliberate the proposed revenue ordinance - Final draft of the ordinance by the revenue generation office. - Presentation of final draft to LCE - LCE approves and endorses to Sanggunian **\*Local Treasurer -- assist in the preparation of the drafting of measure.** 2. **Deliberation and Refinement Stage** - Sanggunian refers the proposed revenue ordinance to the Committee on Ways and Means - Public hearing - Sanggunian enacts revenue ordinance and submits to LCE for approval **\*Local Treasurer- attend public hearing to justify the proposed ordinance.** 3. **Publication Stage** - 3 consecutive days in newspaper of local circulation - Posting in at least 2 conspicuous public places if newspaper is not available. For revenue ordinance with penal provisions - 3 consecutive days in newspaper of general circulation - Posting in at least 2 conspicuous public places if newspaper of general circulation is not available. **\*Local Treasurer- Secure copies of approved revenue ordinances for public dissemination and implementation.** 4. **Implementation Stage** - Implementation of the approved revenue ordinance. **\*Local Treasurer- Collection of TFC based on the new rates.** **PROCEDURAL EQUIREMENTS FOR A TAX ORDINANCE AND REVENUE MEASURES** 1. Written notice to interested/ affected parties. 2. Public hearing - Not earlier than 10 days from notice - Hearing continues until fully deliberated - Secretary of Sanggunian will prepare the minutes - No hearing, no enactment and no approval of ordinance. 3. Approval of Ordinances - If LCE approves, he shall sign on each page of the document - The LCE may veto the ordinance. - The veto shall be communicated by LCE to Sanggunian within 15 days in the province, and within 10 days in city or municipality. - The LCE may veto an ordinance only once. - The Sanggunian may override the veto by 2/3 votes of its members. 4.Publication of Tax ordinance and Revenue Measures within 10 days after the approval. 5\. The ordinance will take effect upon compliance of requirements. 6\. Furnishing of copies of all PCM tax ordinances/ measures to local treasurer. 7\. Review of Tax Ordinances ordinances of component cities and municipalities are reviewed by Sanggunian Panlalawigan ordinances or barangays are reviewed by Sanggunian Panlungsod. 1. Component cities and municipalities - Secretary of Sanggunian will forward the copies of approved ordinance to Sanggunian Panlalawigan within 3 days after approval. - Shall be examined within 30 days from the receipt of document and transmitted to Provincial attorney. - The Provincial Attorney will write his remarks/ recommendation within 10 days from the receipt of document - The Sanggunian may or may not approve the resolution. - If there is no action taken within 30 days, the ordinance will be presumed as valid. 2. Barangay - Sanggunian Barangay shall furnish copies of approved ordinance to Sanggunian Panlungsod within 10 days after enactment, for review. - Within 30 days from receipt, the Sanggunian Panlungsod returns the documents with recommendations for modification. - Effectivity of the ordinance is suspended until fully revised - If there is no action taken within 30 days, the ordinance will be presumed as valid. **Taxing Powers of Provinces** **Taxing Powers of Cities** **Taxing Powers of Municipalities** **Municipalities within Metropolitan Manila Area** 1. **Levy taxes on business not exceeding 50% of the maximum rate prescribed.** 2. **Levy taxes imposed by province at the rates not exceeding those prescribed rate.** **Common Limitations on the Taxing Powers of Local Government Units** **The taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following:** **Section 47 Collection of Taxes** 1. **Tax period shall be greatly calendar year and may be paid in quarterly installments.** 2. **TFC shall accrue on the 1^st^ day of January. Changes in rates shall accrue on the 1^st^ day of quarter following the effectivity of ordinance.** 3. **TFC shall be paid within the 1^st^ 20 days of January. It may be extended due to justifiable reasons but not exceeding 6 months.** 4. **Surcharge 25% and 2% monthly interest , but not exceeding 36 months.**