By By Atty. Romulo P. Atencia
More on Municipal Taxation
posted 16-Jan-2016  ·  
4,554 views  ·   0 comments  ·  

According to Cooley, an authority on taxation: "taxes are the enforced proportional contributions from persons and property levied by the state by virtue of its sovereignty for the support of government and for all public needs." In this regard, it is hornbook doctrine that the power of taxation, being an essential and inherent attribute of sovereignty, belongs, as a matter of right, to every independent government, and needs no express conferment by the people before it can be exercised. It is purely legislative and, thus, cannot be delegated to the executive and judicial branches of government without running afoul to the theory of separation of powers. So, what exactly are the powers of LGUs, assuming that they have any, to create their own sources of revenue and to levy taxes?

********

This space already treated Municipal Taxation sometime in November 2012. However, the same was focused on the right of a province, city or municipality to tax a government instrumentality. A government instrumentalities is any agency of the National Government, not integrated within the department framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy, usually through a charter. Examples of government instrumentalities are Bangko Sentral ng Pilipinas, Philippine Rice Research Institute, Laguna Lake Development Authority, Fisheries Development Authority, Bases Conversion Development Authority, Philippine Ports Authority, Cagayan de Oro Port Authority, San Fernando Port Authority, Cebu Port Authority, and Philippine National Railways. It has also been held that the Manila International Airport Authority (MIAA) is a government instrumentality vested with corporate powers and performing essential public services pursuant to Section 2(10) of the Introductory Provisions of the Administrative Code. We concluded that Local Government Units (LGUs) have no power to tax government instrumentalities.

********

We will focus now on the extent of the LGU’s power of taxation. When government was instituted, there was only one central government and everything fell into it. The power of taxation was wielded by the National Government through its Legislature. But for purposes of administrative efficiency, the country was subdivided into provinces, cities, and municipalities. As a consequence, some questions arose, especially concerning the nature and extent of LGUs to raise revenues within its own territories. With the adoption of the 1973 Constitution, and later the 1987 Constitution, municipal corporations were granted fiscal autonomy via a general delegation of the power to tax. Section 5, Article XI of the 1973 Constitution gave LGUs the “power to create its own sources of revenue and to levy taxes, subject to such limitations as may be provided by law.” This has been renewed and amplified in Section 5, Article X of the 1987 constitution which provides: “Sec.5. Each local government unit shall have the power to create its own sources of revenues and to levy taxes, fees, and charges subject to such guidelines and limitations as the Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the local governments.”

********

Nevertheless, the basic doctrine on local taxation remains essentially the same. As the Supreme Court held in a 1996 case: "The power to tax is primarily vested in the Congress; however, in our jurisdiction, it may be exercised by local legislative bodies, no longer merely be virtue of a valid delegation as before, but pursuant to direct authority conferred by Section 5, Article X of the Constitution. Under the latter, the exercise of the power may be subject to such guidelines and limitations as the Congress may provide which, however, must be consistent with the basic policy of local autonomy. x x x". That is the reason why it is now settled that while the system of local government taxation has changed with the onset of the 1987 Constitution, the power of local government units to tax is still limited.

********

By providing that the power of taxation of local government units shall be – “…..subject to such guidelines and limitations as the Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the local governments” -- it is palpable that the fundamental law did not intend said delegated power to be absolute and unconditional.  Indeed, some of the limitations imposed by statute upon the LGU’s power to tax real property are expressly stated in Sec. 215, LGC, to wit: "Sec. 215. Classes of Real Property for Assessment Purposes. For purposes of assessment, real property shall be classified as residential, agricultural, commercial, industrial, mineral, timberland or special. xxx The city or municipality within the Metropolitan Manila Area, through their respective sanggunian, shall have the power to classify lands as residential, agricultural, commercial, industrial, mineral, timberland, or special in accordance with their zoning ordinances.".

********

It is not hard to understand why the Legislature is very careful in limiting the classes into which lands may be classified for assessment purposes. With the introduction of assessment levels, tax rates could be maintained, although tax payments can be made either higher or lower depending on their percentage (assessment level) applied to the fair market value of property to derive its assessed value which is subject to tax. Moreover, classes and values of real properties can be given proper consideration, like assigning lower assessment levels to residential properties and higher levels to properties used in business. Simply stated, it is the proper classification of the land which justifies the amount of tax which the LGU can assess thereon. 

0 comments
new to catanduanestribune.com?
connect with us to leave a comment.
connect thru
Cancel
Cancel
Cancel
Other Some Random Thoughts articles
home home album photo album blogs blogs