LBT

Question 1

Constitutional basis

Answer 1

Each local govt unit shall have the power to create its own sources of revenue 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.

Question 2

Test of valid ordinance (CUPPGU)

Answer 2

1. It must not contravene with the Constitution or any statute;
2. It must not be unfair or oppressive;
3. It must not be partial or discriminatory;
4. It must not prohibit but may regulate trade;
5. It must be general and consistent with public policy; and
6. It must not be unreasonable.

Question 3

Taxes that may be imposed by PROVINCE

Answer 3

1. Tax on transfer of real property ownership;
2. Tax on business of printing and publication;
3. Franchise Tax;
4. Tax on sand, gravel and other quary resources;
5. Professional tax;
6. Amusement tax;
7. Annual fixed tax for every delivery truck or van of manufacturers or producers, wholesalers of dealers, or retailers in certain products.

Question 4

Requirements to be liable to Franchise Tax

Franchise tax is a tax on the privilege of transacting business in the state and exercising a corporate franchise granted by the state. It is not levied on a corporation simply for existing as a corporation, or upon its property or its income, but on its exercise of the exclusive rights or privileges granted to it by the government.

Answer 4

1. It has a franchise in the sense of a secondary or special franchise;

• A general franchise relates to the right to exist as a corporation, by virtue of duly approved Articles of Incorporation. On the other hand, a special franchise refers to the rights or privileges conferred upon an existing corporation such as the right to use the streets of the LGU to lay pipes, erect poles or string wires. In other words, special franchises are charged with a public use.

2. It is exercising its rights and privilege under this franchise within the territory of the LGU concerned.

• limitation - the province shall not impose tax on business enjoying franchise operating within the territorial jurisdiction of any city located within the province.

Question 5

Amusement tax

Answer 5

Levied on theaters, cinemas, concert halls, circuses and other places of amusement where one seeks admission to entertain oneself in seeing or viewing the show or performance.

Question 6

Tax that may be imposed by CITIES AND MUNICIPALITIES

Answer 6

1. Tax on business
   • Manufacturers, assemblers, repackers, processors etc of any article of commerce of whatever kind or nature;
   • Wholesalers, distributors ors dealers of any aricle of commerce;
   • Exporters and manufacturers, millers, producers, wholesalers etc of essential commodities
   • Retailers
   • Contractors
   • Banks and other financial institutions
   • Peddlers of any merchandise or article of commerce
   • Any business
2. Fees and charges - the municipalities may impose and collect such reasonable fees and charges on business and occupation except professional tax, on the practice of any profession or calling commensurate with the cost of regulation those reserved by the province on the practice of profession. -municipality cannot impose annual occupation tax

Also LGU cannot impose tax on income but only on gross receipts.