Residual Taxing Power of the Local Government Units

RESIDUAL TAXING POWER DEFINED

LGUs may exercise the power to levy taxes, fees or charges on any base or subject not otherwise specifically enumerated herein or taxed under the: 

1.   Local Government Code; 


2.   National Internal Revenue Code; or 


3.   Other applicable laws (Sec. 186, LGC). 


CONDITIONS IN THE EXERCISE OF THE RESIDUAL POWER OF TAXATION 

1)   The tax base or subject is not taxed under the National Internal Revenue Code or other applicable laws; 


2)   The taxes, fees, or charges are not unjust, excessive, confiscatory, oppressive, or contrary to the declare national economic policy of the government; 


3)   A public hearing has been conducted prior to the enactment of the ordinance levying taxes, fees, or charges; and 


4)   The procedures for the approval, effectivity, and publication of tax ordinance have been complied with. 


5)   The residual power is subject to the constitutional limitations on the taxing power and the common limitations on the taxing power of LGUs as prescribed in Section 133 of LGC. 


6)   Principle of Pre-emption or Exclusionary Rule (Ingles, 2018)

PRINCIPLE OF PRE-EMPTION OR EXCLUSIONARY DOCTRINE, WHEN APPLICABLE 

a.    Taxes levied under the NIRC. 


b.   Taxes imposed under the Tariff and Customs 
Code. 


c.    Taxes under special laws. (Ingles, 2018)

Preemption in the matter of taxation simply refers to an instance where the national government elects to tax a particular area, impliedly withholding from the local government the delegated power to tax the same field. This doctrine primarily rests upon the intention of Congress. Conversely, should Congress allow municipal corporations to cover fields of taxation it already occupies, then the doctrine of preemption will not apply. (Victorias Milling Co., Inc. v. The Municipality of Victorias, Negros Occidental, G.R. No. L-21183, September 27, 1968) 

THE FOLLOWING ARE THE POWERS OF TAXATION OF THE LGUS

a.    Common Revenue-Raising Powers of LGUs; 


b.   Specific Powers of LGU to Impose Taxes; 


c.    Power to Levy Community Tax; and 


d.   Powers under Miscellaneous Provisions. (Ingles, 2018)

LGUS CANNOT TAX THE NATIONAL GOVERNMENT

GR:

LGUs cannot impose taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities. 

XPN:

When specific provisions of the LGC authorize the LGUs to impose taxes, fees or charges on the aforementioned entities (City Government of San Pablo, Laguna v. Reyes, G.R. No. 127708, March 25, 1999).