Bureau of Local Government Finance Opinion

April 14, 1997 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION The City Mayor Cabanatuan City S i r : This refers to your letter dated March 10, 1997 requesting clarification whether there is a provision in the Local Government Code (LGC) or any regulation requiring a mandatory revision of the existing tax code particularly the need to impose higher taxes when a component city is converted into a highly urbanized city. It appears that a plebiscite on the highly urbanized status of the City of Cabanatuan is expected to be held on April 26, 1997. However, one of the issues being raised by those against the conversion is the alleged requirement or condition to impose higher taxes. Hence, the above request. In this connection, please be informed that there is no provision in the Code mandating or requiring the imposition of higher taxes as a requirement for the conversion of a component city into a highly-urbanized city. Accordingly, the existing tax code of the City of Cabanatuan shall continue to be in force and effect. It may be mentioned, however, that pursuant to Section 191 of the Code, local government units shall have the authority to increase tax rates over and above those prescribed in said Code but not oftener than once every five (5) years and in no case shall such increase exceed ten percent (10%) of the rates fixed in the Code for each tax subject. We trust that this will help clarify matters. DHITCc Very truly yours, (SGD.) LORINDA M. CARLOS Executive Director