Overview of Local Government Taxes

Local government units, by virtue of the 1987 Constitution and the Local Government Code, have been given the power to raise certain taxes. Hence, the following political subdivisions have the power to tax:

1.) Province

2.) City

3.) Municipality

4.) Barangay

Yes, the barangay has the power to raise its own taxes. A purok, however, is not considered as an LGU and therefore can't raise taxes. The city has the greatest taxing power while the barangay has the least. Like the national government, the LGUs' power to tax is subject to the following limitations:

1.) Inherent

2.) Congressional

3.) Constitutional

The principles of local taxation are as follows:

1.) Taxation shall be uniform in each LGU

2.) Taxes, fees and other charges shall:

a.) Be equitable and based as far as possible on the taxpayer's ability to pay

b.) Be levied and collected only for public purposes

c.) Can't be unjust, excessive, oppressive or confiscatory

d.) Can't be contrary to law, morals, public policy, national economic policy or in restraint of trade

3.) No private person can be given the power to collect local taxes, fees, charges or other impositions

4.) Only the LGU that levied and collected the tax is to benefit from it; it also can decide how the funds will be applied unless there is a specific purpose for the tax

5.) Each LGU must create a progressive taxation system