Legality of Imposing an Amusement Tax on Movie Houses Based on a Fixed Rate Instead of Percentage System Based on Gross Sales

July 8, 1998 DILG OPINION NO. 098-98 VICE-MAYOR ELVIRA D. TAN Ozamiz City Dear Madam: This has reference to your 18 June 1998 letter, with enclosures, inquiring into the legality of imposing an amusement tax on movie houses based on a fixed rate instead of percentage system based on gross sales. In reply to your query, may we invite your attention to Section 151 of Republic Act No. 7160, otherwise known as the Local Government Code of 1991, which is hereto reproduced, in part, to wit: llcd "SECTION 151. Scope of Taxing Power . Except as otherwise provided in this Code, the city may levy the taxes, fees, and charges which the province or municipality may impose: Provided, however, That the taxes, fees and charges levied and collected by highly urbanized and independent component cities shall accrue to them and distribute in accordance with the provisions of this Code." With respect to the power to impose amusement tax, the power of the province under Section 140 of the same law is in point provides, inter alia, to wit: llcd "SECTION 140. Amusement Tax . (a) The province may levy an amusement tax to be collected from the proprietors, lessees, or operators of theaters, cinemas, concert halls, circuses, boxing studio and other places of amusement at a rate of not more than thirty percent (30%) of gross receipts from admission fees." Gleaned from the foregoing provisions, the power of the city, which is similar to the power of the province, to impose an amusement tax cannot be based on a fixed amount but should, in order to be consistent with law, be based on a certain percentage to be determined by the sanggunian concerned, but in no case be more than 30% of the gross receipts from admission fees. The foregoing construction is taken from Section 5 of the Local Government Code which provides that in interpreting the provisions of the same Code, any tax ordinance or measure shall be construed strictly against the local government unit enacting it, and liberally in favor of the taxpayers. Hoping to have enlightened you on the matter. cdlex Very truly yours, (SGD.) JESUS I. INGENIERO Assistant Secretary Department of Interior and Local Government Copy furnished: The City Director DILG City Field Office Ozamiz City The Regional Director DILG Regional Office No. X Cagayan de Oro City His Honor The City Mayor Ozamiz City