Local government's power to tax

In the Philippines, local government units (LGUs) - provinces, cities, municipalities and barangays - are granted the constitutional power (Section 5, Article X of the Constitution) to create their own sources of revenue. Local governments may levy taxes, fees and charges in accordance with the guidelines and limitations set by Congress and only within the boundaries of their respective territorial jurisdictions. For those local governments under the autonomous regions, their taxing powers are limited and bound by their enabling laws. (The not-so-inherent power to tax Ma. Teresa Ledesma Tax Director, PwC Philippines 02 Jun 2016. www.pwc.com)

The power of LGUs to create their own sources of revenue and to levy taxes, fees and charges is subject to such guidelines and limitations as the Congress may provide which must be consistent with the basic policy of local autonomy. (Article X, Section 5 of the 1987 Constitution)

The power to tax is an attribute of sovereignty, and as such, inheres in the State. Such, however, is not true for provinces, cities, municipalities and barangays as they are not the sovereign; rather, there are mere "territorial and political subdivisions of the Republic of the Philippines." (G.R. No. 187631)

It is settled that a municipal corporation unlike a sovereign state is clothed with no inherent power of taxation. The charter or statute must plainly show an intent to confer that power or the municipality, cannot assume it. And the power when granted is to be construed in strictissimi juris. Any doubt or ambiguity arising out of the term used in granting that power must be resolved against the municipality. Inferences, implication, deductions – all these- have no place in the interpretation of the taxing power of a municipal corporation. (G.R. No. 187631)

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