Professional Documents
Culture Documents
(Module 2)
Module 2 Outline
Legal
Bases LG Fiscal Organization Provisions of R. A. No. 7160 Issues and Initiatives Future Challenges
1987 Constitution, its provisions on local government R. A. 7160, or the Local Government Code of 1991 all existing laws, acts, decrees, executive orders, proclamations and administrative regulations not inconsistent with the 1987 Constitution and the Local Government Code of 1991
For real property taxes due from 1986 to 1991, including penalties and interests, the computation should be based from the provisions of Sec. 66 of P.D. 464, i. e., 2% on the amount of the delinquent tax for each month of delinquency or fraction thereof, but in no case shall the total penalty exceed 24% of the delinquent tax. Thus, penalties imposed are valid only up to 24% of the delinquent tax. However, from 1992 onwards, the basis for the computation of the real property tax payable, including penalties or interests, if applicable, must be R.A. 7160 (Local Government Code) as it has expressly repealed P.D. 464. Thus, the penalty is 2% for each month of delinquency, but not to exceed 36 months or penalties imposed are valid up to 72% of the delinquent tax.
NG Level DILG
NEDA
LG Level
LCE
Sanggunian
Local Treasurer
Budget Officer
Assessor
Accountant
Local Planning and Development Officer Local Finance Committee
Provisions of the Local Government Code of 1991, Governing the Exercise of Revenue Raising Powers of LGUs
Sec. 129 authority to create own-source revenues and to levy taxes, fees, and charges consistent with the basic policy of local autonomy subject to limitations under the 1991 LGC proceeds accrue exclusively to the LGU
Fundamental Principles
Sec. 130
uniformity of taxation in each LGU taxes, fees, charges and other impositions :
equitability taxpayers ability to pay public purpose not unjust, excessive, oppressive, or confiscatory not contrary to law, public policy, national economic policy, or in restraint of trade
collection shall not be let to private persons proceeds shall inure solely to the LGU imposing the tax, fee or charge progressive system of taxation
Section 132 revenue ordinance by the sanggunian Section 186 - impose tax, fee, or charge on any base or subject Section 187 - mandatory public hearing; issue on constitutionality/legality
appealable to DOJ- will not suspend the effectivity of the ordinance- DOJ decision appealable to the regular court
Section 189 dissemination of revenue ordinance by the local treasurer Section 190 attempt to enforce void revenue ordinance is sufficient
ground for administrative action against local officials and employees responsible therefor
Section 191 - authority to adjust tax rates once every 5 years, but not to
exceed 10% of the rates under the 1991 LGC
Section 133
income tax except on banks and other financial institutions documentary stamp tax tax on estates, inheritance, gifts, legacies and other acquisitions mortis causa, except tax on transfer of real property ownership customs duties, registration fees of vessel and wharfage on wharves, tonnage dues and all other kinds of customs fees, charges and dues except wharfage on wharves constructed and maintained by the LGU impositions upon goods carried into or out of, or passing through, the territorial jurisdictions of LGUs in the guise of charges for wharfage, toll for bridges or otherwise, or other taxes, fees or charges in any form upon such goods or merchandise impositions on agricultural and aquatic products when sold by marginal farmers or fishermen
taxes on business enterprises certified to by the BOI as pioneer or nonpioneer for a period of 6 and 4 years, respectively from the date of registration excise taxes on articles enumerated under the NIRC, as amended impositions on petroleum products percentage tax or VAT on sales, barters or exchanges, or similar transactions on goods or services, except as provided in the 1991 LGC (Sec. 143, h, LGC) taxes on gross receipts of transportation contractors and persons engaged in the transportation of passengers or freight by hire and common carriers by air, land or water, except as provided in the LGC (Sec. 143, h, LGC) taxes on premiums paid by way of reinsurance or retrocession impositions for the registration of motor vehicles and for the issuance of all kinds of licenses or permits for the driving thereof, except tricycles impositions on Philippine products for exports, except as otherwise provided in the 1991 LGC (Sec. 143, h, LGC) impositions on duly registered Countryside & Barangay Business Enterprises and cooperatives impositions on the NG, agencies & instrumentalities, & LGUs
External Sources
Shares from National Taxes
IRA, Tobacco Excise Tax, ECOZONES, & VAT Shares from the Utilization of National Wealth royalties, mining taxes, forestry and fishery charges, and other fees and charges
Internal Sources
Taxes Real Property Taxes Business Taxes Other Taxes Non-Tax Revenues Fees : regulatory fees; permit fees; toll fees Service/User Charges
Province
City
Municipality
Barangay
Franchise Tax Tax on Business of Printing and Publication Annual Fixed Tax for Every Delivery Truck or Van of Manufacturers or Producers, Wholesalers of, Dealers, or Retailers in, Certain Products Tax on Sand, Gravel & Other Quarry Resources Professional Tax Amusement Tax
50% of 1% of gross receipts (max.) 50% of 1% of gross receipts (max.) Php 500.00
x x x
x x x
10% of FMV per cubic meter (max.) Php 300.00 (max.) 10% of gross receipts from admission fees (max.) X
- do -
Php 300.00 (max.) 10% of gross receipts from admission fees (max.)
x x
x x
Province
1% of AV (max.) 1% of AV 5% of AV (max.) 60% of project cost (max.) x
Municipality
x x x x
Barangay
x x x x
gross sales or receipts of Php50,000 or less within a city; gross sales or receipts of Php30,000 or less within a municipality 1% of gross sales or receipts
Non-Tax Revenues:
Service Fees and Charges Public Utility Charges Toll Fees or Charges x x x
Current Issues
Receipts from Eco. Enterprise 11.0% Service/User Charges 3.9% Regulatory Fee 6.0 %
Misconception or misunderstanding of the true meaning of local autonomy aggravated by the inability of NGAs to transform the mindset of LGU officials who remain in the traditional realm of politics, into a culture of progressivity.
Lack of synchronization and harmonization of policies among the various national government agencies and bureaus involved in fiscal devolution. Problems in real property valuation.
Compliance of LGUs in the Conduct of General Revision of SMV 1993-2006
100% 90%
83%
63%
54%
36%
31% 25%
75% 92% 1993 (1st GR) 75% 92% 83% 61% 66% 1996 (2nd GR) 61% 66% 63% 57% 52% 1999 (3rd GR) 57% 52% 54% 41% 33% 2002 (4th GR) 41% 33% 36% 27% 34% 2005 (5th GR) 27% 34% 31% 28% 22% 2008 (6th GR) 28% 22% 25%
Initiatives
an attempt to synchronize and harmonize local planning, investment programming, revenue administration, budgeting and expenditure management in the LGU
Future Challenges!!!
There is no doubt that the Philippines is on the right track towards more effective governance, and that is through the empowerment of LGUs. However, what has been accomplished in the past 15 years since the adoption of the Local Government Code, is the legislative structural showcase for decentralization. The framework remains to be operationalized to achieve its intended objective of making local governments truly autonomous or capable of generating by itself adequate resources to fund its developmental programs and improve the scope and quality of services to its constituencies. There should be greater and genuine effort to substantiate the Local Government Code by addressing the problems identified earlier in this presentation. The most important of this is financial autonomy. The solution lies in the areas of legislative, as well as administrative remedies. In the former case, there is an urgent need to plug the loopholes of the Local Government Code which had been identified through the years.
These problems have been identified and complied in several proposed legislations amending the Local Government Code, which have been pending for years. These initiatives have been subjected to various consultations and research studies by the University of the Philippines Local Government Center, the Department of Local Government, and a number of projects funded by international institutions. The Congress of the Philippines should take-up these proposed reforms for legislation. From the point of view of administration, the need for clarifying and coordinating the programs and projects of the government relating to local governments should likewise be an agenda for the immediate future. This will lead to better management of resources for local governments and also reduce or remove useless duplication of efforts. A complementary program should focus on further capacitating local government officials, both elective and appointive for their roles in effective governance.
References: 1987 Philippine Constitution1987. Constitution of the Philippines. Republic Act No. 7160 or the Local Government Code of the Philippines. Studies Conducted by the Land Administration and Management Project (LAMP) funded by AusAID and World Bank. Local Government Bureaucracy and Local Fiscal Administration, 2006, Local Government Foundation (LOGODEF) and Kondrad Adenauer Stiftung. Harmonization of Local Planning, Investment Programming, Revenue Administration, Budgeting and Expenditure Management with Joint Memorandum Circular No. 001, series of 2007, German Agency for Technical Cooperation Decentralization Program. MDFO-LOGOFIND Project Completion Report 2008.