DILG issues guidelines on imposition, collection of local taxes
Collection of illegal 'pass-through' fees on delivery trucks ordered stopped
Collection of "pass-through" fees by local
government units on delivery trucks
transporting products in the different
parts of the country is illegal according to
the Department of Interior and Local
Government.
In order to avoid the illegal collection and imposition of taxes, fees or charges by local government units (LGUs), the Department of the Interior and Local Government (DILG) recently issued guidelines on the scope and coverage of taxing powers of LGUs in accordance with the provisions of the Local Government Code.
DILG Secretary Ronaldo Puno said the guidelines were issued in the midst of reports received by the Department that several LGUs are allegedly collecting illegal ‘pass-through’ fees on delivery trucks transporting livestock and other products.
Earlier, the Department ordered a probe on 85 LGUs who are reportedly charging ‘pass-through’ fees despite the provisions clearly stated under the Local Government Code that limits and sets the taxes, fees and charges that can be imposed on delivery trucks.
“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.
Memorandum Circular 2009-42 dated March 27, 2009 was furnished to all provincial governors, city and municipal mayors, presiding officers and members of the sanggunians at all levels.
The DILG Secretary said the important requisite in the exercise of taxing powers by local government is the enactment of an appropriate ordinance by the concerned sanggunian.
Under the guidelines, provinces are authorized to impose 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.
And 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.
Similarly, 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.
On the other hand, in accordance with Section 133 of the Code, the taxing powers of LGUs shall not extend to the levy of the following: income tax, except when levied on banks and other financial institutions; documentary stamp tax; taxes on estates, inheritances, 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;
Percentage of value-added tax on sales, barters or exchanges or similar transactions on goods or services except as otherwise provided in the Code; taxes of gross receipts of transaction, 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 Code; taxes on premiums paid by way or reinsurance or retrocession; taxes, fees or charges for the registration of motor vehicles and for the issuance of all kinds of licenses or permits for the driving thereof, except tricycles; taxes, fees or other charges on Philippine products actually exported, except as provided in the Code; taxes, fees, or charges on Countryside and Barangay Business Enterprises and Cooperatives duly registered under RA 6810 and RA 6938; and taxes, fees or charges of any kind on the national government, its agencies and instrumentalities and LGUs.
Puno said LGUs are authorized to adjust the tax rates prescribed in the Code but not oftener than once in every five years, and in no case shall such adjustment exceed 10% of the rates fixed in the Code.
He also said local execs, presiding officers and members of the sanggunians at all levels who fail to strictly adhere with the fundamental principles, limitations and requisites of the exercise of taxing power by an LGU or who fail to rectify defective tax ordinances, may face administrative and legal sanctions. (www.dilg.gov.ph)