Fundamental Principles of Local Taxation
- Uniform taxation within local subdivisions.
- Taxes based on taxpayer's ability to pay.
- Taxes levied only for public purposes.
- Taxes must not be unjust, excessive, oppressive, or confiscatory.
- Taxes must comply with law, public policy, and national economic policy.
- No contracting out of tax collection.
- Revenue collected benefits the local government that imposes the tax.
- Local governments should develop progressive taxation systems.
Key Definitions
- Extensive definitions of terms such as agricultural products, amusement, business, capital, corporation, dealer, fee, hotel, license, local government, motor vehicle, occupation, peddler, person, profession, resident, retail, tax, wholesale, and others.
Local Authority for Taxation
- Taxing powers exercised by respective local legislative bodies (provincial board, city/municipal councils, barrio council).
Common Limitations on Taxing Powers
- Local governments cannot impose taxes on documentary stamps, income, customs duties (except certain wharfage), income taxes, motor vehicle registrations, bank or insurance company taxes, export taxes, and a list of other restricted areas.
Provincial Taxing Powers
- Provinces may impose taxes on real property transfer, printing business, franchises, sand and gravel fees, occupation tax, amusements, weights and measures licensing, peddlers, and rental fees for municipal waters.
- Some taxes shifted from national or municipal governments to provinces.
- Specific limitations include prohibition on business tax, fishery rentals, and municipal fees.
Municipal Taxing Powers
- Municipalities may impose business taxes based on gross receipts, a variety of fees and charges (building permits, marriage fees, civil registrations, police clearances, licensing fees), fishery rentals, and others.
- Detailed graduated tax schedules based on amounts or capital investments.
- Prohibitions against levying taxes reserved for provinces and cities or restricted by national law.
City Taxing Powers
- Cities can impose all taxes that provinces and municipalities can, including specified ones previously held by national or municipal governments.
- Maximum tax rates can exceed those of provinces or municipalities by up to 50%, except for certain occupation, amusement, and licensing fees which are uniform.
- Cities can choose to impose percentage tax instead of graduated fixed taxes.
- May levy specific taxes on items subjected to national excise taxes within limits.
- Same restrictions as to prohibited taxes apply.
Barrio Taxing Powers
- Limited to specific taxes and fees, including those on stores, signs, gamecocks, service charges, and voluntary contributions.
- Tax rates are capped at 25% or 10% of similar municipal or city taxes depending on the barrio's classification.
Common Revenue-Raising Powers
- Local governments may collect market fees for the use of market spaces, recruitment fees, slaughterhouse fees, public utility charges, tuition fees, tolls for roads and bridges, charges for holding benefits, permit fees, and service charges.
- Rules on subdivision of markets, fee schedules, issuance of cash tickets, and penalties for non-payment.
- Specific guidelines for slaughtering permits, fees, and locations.
Residence Tax
- Levied by National Government through BIR but benefits local governments.
- Imposed on residents age 18+ who earn certain income or own property; also on corporations.
- Detailed schedule for base and additional taxes based on property and income.
- Specific exemptions provided.
- Certificates issued upon payment; required in various official transactions.
- Provisions for delinquency penalties, filing, and refund.
Administrative Provisions on Ordinances
- Ordinances must be numbered, approved by local chief executives who have veto powers.
- Effectivity rules and mandatory publication.
- Secretary of Finance empowered to review and suspend ordinances that violate fundamental principles.
- Provisions for formal protests, suspension appeals, and automatic revocation if not complied with.
- Measures against enforcement of void/suspended ordinances.
- Authorization of similar or unenumerated taxes subject to limitations and review.
- Local governments may impose regulatory fees but no discriminatory or restraint of trade measures.
- Penal provisions for violations capped at fines or imprisonment.
Tax Collection Procedures
- Taxes fixed annually, payable quarterly.
- Deadlines and extensions for payment prescribed.
- Surcharges and interest on unpaid taxes and fees set (generally 25% surcharge and 14% interest per annum).
- Collection authority vested in local treasurers.
- Authority granted to treasurers for examination of taxpayer books to ensure correct assessment.
Civil Remedies for Tax Collection
- Enforcement via distraint of personal property or legal action.
- Local government taxes constitute liens superior to private liens.
- Detailed distraint procedures including seizure, notice, sale, and disposition of proceeds.
Final Provisions
- Transitory provisions require local governments to adjust or rescind taxes exceeding new Code limits within one year.
- Rules for administrative review and cabinet oversight detailed.
- Separability and repealing clauses ensuring legal coherence.
The attached source definitions and interpretations from various authoritative sources support consistent application and legal clarity.