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Local tax collection guidelines out

By Abigail Kwok
INQUIRER.net
First Posted 16:21:00 04/02/2009

Filed Under: State Budget & Taxes, Governance, Government

MANILA, Philippines -- The Department of Interior and Local Government (DILG) on Thursday released guidelines on the imposition and collection of local taxes amid reports that some local government units (LGUs) were collecting illegal ?pass through? fees on delivery trucks.

In a memorandum circular issued to all provincial governors, city and municipal members and all members of the Sanggunian, DILG Secretary Ronaldo Puno stressed that the important requisite in the exercise of taxing powers by local governments is the enactment of an appropriate ordinance by the concerned Sanggunian.

Under the Local Government Code, provinces are authorized to impose only the following local taxes, fees and charges: tax on transfer of real property ownership; tax on business of printing and publication; franchise tax; tax on sand, gravel and other quarry resources; professional tax; amusement tax; and annual fixed tax for every vehicles used in the delivery or distribution of products to sales outlets or consumers within the province.

For cities: taxes, fees and charges which the province or municipality may impose, except as otherwise provided in the Local Government Code.

For municipalities: business tax; tax on retirement of business; fees and charges on business and occupation; fees for sealing and licensing of weights and measures; and fishery rentals, fees and charges.

For barangays: taxes on stores and retailers with fixed business establishments; service fees or charges for the regulation or the use of barangays-owned properties or service facilities; barangays clearance; fees and charges for the commercial breeding of fighting cocks, cockfights and cockpits, on places of recreation which charge admission fees, and on billboards, signboards, neon signs and outdoor advertisements.

Meanwhile, the common revenue-raising powers of LGUs are the following: service fees and charges for services rendered, at a reasonable amount; charges for the operation of public utilities owned, operated and maintained by the local government within its jurisdiction; and toll fess and charges for the use of any public road, pier or wharf, waterway, bridge, ferry or telecommunication system funded and constructed by the local government.

Under Section 133 of the Local Government Code, LGUs are prohibited from imposing the following taxes: income tax, except when levied on banks and other financial institutions; documentary stamp tax; taxes on estates, inheritances, gifts, legacies and other acquisitions mortis causa, except as otherwise provide in the Code; customs duties and other kinds of customs fees, charges and dues except wharfage on wharves constructed and maintained by the LGU concerned; taxes, fees and charges and other impositions upon goods carried into or out of, or passing through the territorial jurisdictions of LGUs; taxes, fees or charges on agricultural and aquatic products when sold by marginal farmers or fishermen; taxes on business enterprises certified by the Board of Investments; excise taxes on articles enumerated under the National Internal Revenue Code, as amended, and taxes, fees or charges on petroleum products.

Puno warned that local government officials caught imposing illegal taxes on civilians will face both administrative and legal sanctions.

?We are issuing these guidelines in order to avoid any confusion or misinterpretation on the provisions of the Code pertaining to the taxing powers of LGUs and to remind them on the scope and limitations of their taxing powers,? Puno said.

Earlier, Puno ordered the investigation of some 85 LGUs reportedly charging illegal ?pass-through? fees despite being prohibited under the Local Government Code.



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