Bureau of Local Government Finance Opinion

May 13, 1997 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Antonio A. Buenafe Vice Mayor Castillejos, Zambales S i r : This refers to your letter dated February 11, 1997 requesting legal opinion relative to the propriety of Ordinance No. 95-12 imposing an annual permit fee on operators of transport services. Upon perusal of the subject portion of the Ordinance, this Bureau finds that Section 8U.01 thereof imposes an annual permit fee on business engaged in "transport services for-a-fee" based on the number of vehicles being used while Section 3V.01 imposes an annual registration fee for every motorized tricycle in the municipality. Section 133 (j) and (l) of the Local Government Code of 1991 (LGC) provide as follows: "Sec. 133. Common Limitations on the Taxing Powers of Local Government Units . Unless otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following: "xxx xxx xxx "(j) Taxes on the gross receipts of transportation contractors and persons engaged in the transportation of passengers or freight by hire and common carriers by air, land or water, except as provided in this Code; "xxx xxx xxx "(l) Taxes, fees or charges for the registration of motor vehicles and for the issuance of all kinds of licenses or permits for the driving thereof, except tricycles ; (Emphasis supplied.) "xxx xxx xxx." From the foregoing provisions of the Code, it may be noted that local governments may not impose taxes on the business of transportation contractors. By way of comment, therefore, if a business is not among those subject to tax under the Code, the local government unit may not legally require such business to secure and pay Mayor's permit before engaging in the business. However, regulatory fees and service charges may be levied and collected from such businesses. On the other hand, it may be stated that as provided for under Section 133(l) of the code, that municipality may impose an annual registration fee for every motorized tricycle being operated therein. THDIaC We trust that this will help clarify matters. Very truly yours, (SGD.) LORINDA M. CARLOS Executive Director