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Transcript of - Ching Agcaoili
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BasicTaxationPrinciplesandLegal Basesof RevenueRaisingPowers ofLGUs
(Module 2)
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Module 2 OutlineLegal Bases
LG Fiscal Organization
Provisions of R. A. No. 7160
Issues and Initiatives
Future Challenges
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Legal Baseson the Taxing& Revenue RaisingPowers of LGUs
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Sources of Power of LocalGovernments 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 1987Constitution and the Local Government
Code of 1991
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Sec. of Finance vs. Ilarde and CabalunaMay 9, 2005For real property taxes due from 1986 to 1991, including
penalties and interests, the computation should be based from theprovisions of Sec. 66 of P.D. 464, i. e., 2% on the amount of thedelinquent 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 thedelinquent tax.
However, from 1992 onwards, the basis for thecomputation of the real property tax payable, including penalties or
interests, if applicable, must be R.A. 7160 (Local GovernmentCode) as it has expressly repealed P.D. 464. Thus, the penalty is2% for each month of delinquency, but not to exceed 36 months orpenalties imposed are valid up to 72% of the delinquent tax.
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Fiscal Organizationof LGUs Underthe DecentralizedRegime
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NG Level DILG
NEDA
DBM
DOF COA
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LCE
Sanggunian
Local Treasurer
Budget Officer
Assessor
Accountant
Local Planning andDevelopment Officer
Local Finance Committee
LG Level
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Provisions of theLocal Government Codeof 1991, Governingthe Exercise of RevenueRaising Powers of LGUs
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Power to Create Own-Source Revenues Sec. 129 authority to create own-source revenues and to
levy taxes, fees, and charges
consistent with the basic policy oflocalautonomy
subject to limitations under the 1991 LGC
proceeds accrue exclusively to the LGU
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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
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LGU Taxing and Revenue Raising Powers Section 132revenue 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- DOJdecision appealable to the regular court
Section 188publication
in full of the approved revenue ordinance for 3consecutive days in a newspaper of local circulation/posting in at least 2conspicuous and publicly accessible places
Section 189dissemination 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 employeesresponsible therefor
Section 191 - authority to adjust tax rates once every 5 years, but not toexceed 10% of the rates under the 1991 LGC
Section 192grant oftax exemptions, incentives or reliefs
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Limitations on LGU Power to Tax 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 onwharves, tonnage dues and all other kinds of customs fees,
charges and dues except wharfage on wharves constructed andmaintained 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 productswhen sold bymarginal farmers or fishermen
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Sourcesof LGU Income
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External Sources Shares from National Taxes
IRA, Tobacco Excise Tax,
ECOZONES, & VAT
Shares from the Utilization of National
Wealth -
royalties, mining taxes, forestryand fishery charges, and other
fees and charges
Grants -
foreign or local
Loans/Borrowingsbanks and other financial
institutions, LGUs
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Internal Sources Taxes
Real Property Taxes
Business Taxes
Other Taxes
Non-Tax Revenues
Fees : regulatory fees; permit fees;toll fees
Service/User Charges
Receipts from Economic Enterprise
Operations
Other Receipts
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Internal/Own SourceIncome of LGUs
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Revenue Province City Municipality Barangay
Tax Revenues:
Tax on Transfer of Real Property
Ownership
50% of 1% of price or
FMV, whichever ishigher (max.)
rates may exceed the
maximum rates allowedfor the province or
municipality by not
more than 50%
x x
Franchise Tax 50% of 1% of gross
receipts (max.)
- do - x x
Tax on Business of Printing and
Publication
50% of 1% of gross
receipts (max.)
-do- x x
Annual Fixed Tax for Every Delivery
Truck or Van of Manufacturers or
Producers, Wholesalers of, Dealers, or
Retailers in, Certain Products
Php 500.00 - do- x x
Tax on Sand, Gravel & Other Quarry
Resources
10% of FMV per cubic
meter (max.)
- do - x x
Professional Tax Php 300.00 (max.) Php 300.00 (max.) x x
Amusement Tax 10% of gross receipts
from admission fees
(max.)
10% of gross receipts
from admission fees
(max.)
x x
Community TaxIndividualCorporate
X x
LGU Own Source Income
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LGU Own Source IncomeRevenue Province City/Municipality
within M. Manila
Municipality Barangay
Real Property Tax (Basic) 1% of AV (max.) 2% of AV (max.) x x
Special Education Fund (SEF) 1% of AV 1% of AV x x
Tax on Idle Lands 5% of AV (max.) 5% of AV (max.) x x
Special Levy on Lands benefited by
Public Works, Projects or
Improvements funded by LGU
60% of project cost
(max.)
60% of project cost
(max.)
x x
Tax on Business x graduated schedulebased on gross sales or
receipts
graduatedschedule based on
gross sales or
receipts
gross sales orreceipts of
Php50,000 or less
within a city; gross
sales or receipts of
Php30,000 or less
within a
municipality1%of gross sales or
receipts
Non-Tax Revenues:
Service Fees and Charges
Public Utility Charges x
Toll Fees or Charges x x
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Current Issues
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LGUs continue to be financially dependent from the central government
LGU AVERAGE REVENUE SOURCES (2001 2008)
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LGU AVERAGE REVENUE SOURCES (2001 - 2008)In Php Million
NON-TAX
REVENUE26%
TAX
REVENUE
74%
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LGU AVERAGE REVENUE SOURCES (2001 - 2008)In Php Million
Real Property Tax36.7 %
Business Taxes32.6 %
Other Taxes4.4 %
Regulatory Fee6.0 %
Service/UserCharges
3.9%
Receipts from Eco.Enterprise
11.0%
Toll Fees0.1 %
Other Receipts5.3 %
LOCAL AVERAGE TAX SOURCES (2001 2008)
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LOCAL AVERAGE TAX SOURCES (2001 2008)In Php Million
REAL PROPERTY TAX
49.8%
BUSINESS TAXES44.3%
OTHER TAXES6.0%
LOCAL AVERAGE NON TAX SOURCES (2001 2008)
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LOCAL AVERAGE NON-TAX SOURCES (2001 - 2008)in Php Million
Regulatory Fees22.8%
Other Receipts20.3%
Service/UserCharge14.9%
Receipts from Eco.Enterprise
41.8%
Toll Fees
0.3%
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1. Misconception or misunderstanding of the true meaning of local
autonomy aggravated by the inability of NGAs to transform the mindsetof LGU officials who remain in the traditional realm of politics, into a
culture of progressivity.
Current Issues on Tax Administration and PublicFinance
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Current Issue/s on Tax Administration and PublicFinance2. Lack of synchronization and harmonization of policies among the various
national government agencies and bureaus involved in fiscal devolution.
3. Problems in real property valuation.
1993 (1st GR) 1996 (2nd GR) 1999 (3rd GR) 2002 (4th GR) 2005 (5th GR) 2008 (6th GR)
Provinces 75% 61% 57% 41% 27% 28%
Cities 92% 66% 52% 33% 34% 22%
Total 83% 63% 54% 36% 31% 25%
75% 61% 57% 41% 27% 28%92% 66% 52% 33% 34% 22%
83%
63%54%
36%
31%25%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Percento
fLGUCompliance
Compliance of LGUs in the Conduct of General Revision of SMV1993-2006
Source: Bureau of Local Government Finance (BLGF)
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Initiatives
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Response/Initiatives of theGovernment to the Issue/sJMC No. 2010-01
enjoining all provinces, cities, and themunicipality of Pateros, MM to revise
SMV and conduct general revision ofproperty values for RPT
JMC No. 2010-02 implementation of the idle land tax
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Response/Initiatives of theGovernment to the Issue/sJMC No. 001, series of 2007
an attempt to synchronize andharmonize local
planning, investmentprogramming, revenueadministration, budgeting andexpenditure management inthe LGU
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Response/Initiatives of theGovernment to the Issue/sLAMP2-ValuationComponent
Valuation Reform Act Bill
address the issues on real propertyundervaluation and the adverse impact on
revenue generation and administration
implemented by the DOF through theBLGF and the NTRC
legislative reforms are being pursued bythe DOF to address certain dysfunctionsin the LGC that are not conducive torevenue generation both in the nationaland local government which adverselyaffect fiscal autonomy
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Response/Initiatives of theGovernment to the Issue/sR. A. No. 9646, or the RealEstate Service Act (RESA)
took effect, August 1, 2009
subjects real estate servicepractitioners, real estate brokers, realestate appraisers/valuers both in privateand government sectors, localgovernment assessors, and real estateconsultants, to a licensure examination
significant feature of this law is theinclusion of government appraisers andlocal assessors in theprofessionalization, and which nowrequires licensure for their appointment.
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Response/Initiatives of theGovernment to the Issue/sCredit Financing throughMDFO
special revolving fund that aims to
establish an effective mechanismthat would enable LGUs to availfunds local and internationalassistance for the implementationof various social and economic
development projects atconcessional financing terms
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Future Challenges!!!
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There is no doubt that the Philippines is onthe right track towards more effectivegovernance, and that is through the empowermentof LGUs. However, what has been accomplished
in the past 15 years since the adoption of the LocalGovernment Code, is the legislative structuralshowcase for decentralization. The frameworkremains to be operationalized to achieve itsintended objective of making local governmentstruly autonomous or capable of generating by
itself adequate resources to fund its developmentalprograms and improve the scope and quality ofservices to its constituencies.
There should be greater and genuine effort tosubstantiate the Local Government Code byaddressing the problems identified earlier in thispresentation. The most important of this isfinancial autonomy. The solution lies in the areasof legislative, as well as administrative remedies. Inthe former case, there is an urgent need to plug theloopholes of the Local Government Code which
had been identified through the years.
Th bl h b id ifi d d
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These problems have been identified andcomplied in several proposed legislations amendingthe Local Government Code, which have beenpending for years. These initiatives have beensubjected to various consultations and research
studies by the University of the Philippines LocalGovernment Center, the Department of LocalGovernment, and a number of projects funded byinternational institutions. The Congress of thePhilippines should take-up these proposed reformsfor legislation.
From the point of view of administration, the need for clarifying andcoordinating the programs and projects of thegovernment relating to local governments shouldlikewise be an agenda for the immediate future.
This will lead to better management of resourcesfor local governments and also reduce or removeuseless duplication of efforts.
A complementary program should focus onfurther capacitating local government
officials, both elective and appointive for theirroles in effective governance.
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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, InvestmentProgramming, Revenue Administration, Budgeting
and Expenditure Management with Joint
Memorandum Circular No. 001, series of2007, German Agency for Technical Cooperation
Decentralization Program.
MDFO-LOGOFIND Project Completion Report 2008.
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Thank Youand
Mabuhay!!!Ching Q. AgcaoiliBureau of Local Government FinanceDepartment of Finance