Bureau of Local Government Finance Opinion

July 11, 2011 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Rolando M. Acosta, CESO III Director Bureau of Local Government Supervision Department of the Interior and Local Government A. Francisco Gold Condominium II Edsa cor. Mapagmahal St. Diliman, Quezon City Sir : This refers to your letter dated June 8, 2001 relative to the appeal of the Organisasyon ng Pilipinong Mang-aawit (OPM) through its President Mitch Valdes, to President Gloria Macapagal-Arroyo, requesting for her assistance pursuant to her general supervisory powers over local government units in convincing them to exercise prudent restraint in the use of taxing powers, by considering either a moratorium or a proportionate reduction in the rate of amusement taxes imposed on pop, rock and other musical concerts as well as theater productions. In response, that Bureau drafted a Memorandum Circular proposing two policy options to be undertaken by both the National Government and by LGUs, i.e. , (1) possible amendments to the Local Government Code of 1991 on the taxing powers of LGUs and (2) the reduction of amusement taxes on musical concerts and theater production as an option by LGUs, from the present maximum rate of 30% to 10%, based on the passage of a duly enacted ordinance. Hence, the request for comments and/or recommendations. On policy No. 1, it is worthwhile to mention that House Bill No. 7345, introduced by Hon. Romeo D. Candazo entitled "AN ACT AMENDING REPUBLIC ACT NUMBER SEVEN THOUSAND ONE HUNDRED AND SIXTY, OTHERWISE KNOWN AS THE LOCAL G OVERNMENT CODE OF 19 91, AND FOR OTHER PURPOSES." is now pending in the House of Representative. aDECHI On the other hand, it may be stated that local government unit may, at any time thru an ordinance, adjust downwards the rates of any existing tax, fee or charge, or even abolish it altogether, unless it is among the so-called mandatory impositions under the Code and its Implementing Rules, or the rates of which are declared by law or regulation to be uniform throughout certain levels of the local government units. In this regard, however, due consideration should be given to the impact of possible revenue losses upon the financial position of the local government unit. That Office should propose any measures to compensate the losses and augment the needed funds for the efficient and effective delivery of basic services and facilities. In addition, it may be stated that the amusement tax is not a fixed tax, the levy and collection thereof is based on "gross receipts from admission fees." The fact is, the tax is shouldered by the patrons of, or those seeking admission to, amusement places and not by the operator of the amusement place. Very truly yours, (SGD.) BENJAMIN A. GERONIMO Executive Director <www.blgf.gov.ph/downloads/opinion/localtax/2001/a2001-0702.pdf> last visited January 16, 2014.