Introduction:
Social media has changed the world in many ways. It is a powerful tool that can be used for good or evil, depending on how we use it. It has enabled faster and easier communication across the globe, connecting people from different cultures, backgrounds, and interests. It increased the access and exposure to information, news, and opinions, allowing users to learn from diverse sources and perspectives. Moreso, it has empowered individuals and groups to voice their views, raise awareness, and mobilize for social change on various issues, such as human rights, environmental protection and political participation. To me, this is the good side of social media.
On the contrary, the evil side of it has created challenges and risks. Irresponsible users use it for mis/disinformation, cyberbullying, privacy breaches, and addiction. Thus, users are required to be critical, responsible, and ethical in their online transactions.
The discussions below will focus on the social media bickering happening in the municipality of Pandan. I would like to believe that what is happening in Pandan is more of political posturing than raising valid issues as misleading and distorted information proliferates social media. While this is municipality-specific, this may also happen in any of the municipalities in our province sooner or later. I must emphasize, that being critical to the government per se is not wrong for as long as pieces of information and allegations are well-founded and are based on facts.
The ultimate object of this discussion is not only to provide clarity to the clouded minds of those select few, politically-frustrated individuals and their cult-followers but also to inform and educate our readers about one of the most critical issues – taxes.
I – THE 155 Million Proposed Loan for Sanitary Land Fill and Water System
Even before this issue exploded, a select few politically-frustrated individuals kept on throwing and disseminating false information in their social media posts by making it appear that the present administration is motivated not to serve its constituents but serve personal interest. When the proposed loan surfaced, all the more that mis/disinformation grew horrendously by conditioning the minds of the readers that it’s not purposely to better the services provided by the local government to its constituents but only for personal gain. After the press conference called for by the present administration, as their allegations were all debunked, another issue was brought to fore, that is, the high business tax being collected by the local government unit through the Municipal Treasurer’s Office.
II – LOCAL GOVERNMENT’S POWER TO CREATE ITS OWN SOURCES OF REVENUE
Taxation is a mode of raising revenue for public purpose. Taxes, on the other hand, are enforced proportional contributions from persons and property, levied by the state by virtue of its sovereignty for the support of the government and for all its public needs.
The local government’s power to create sources of revenue is enshrined under Article X, Section 5 of the 1987 Philippine Constitution. Local government’s power to tax or to generate local revenue is now pursuant to the direct authority conferred by the Constitution. The enabling law to this effect, the Local Government Code of 1991 reiterated, in verbatim, under Section 129 said Article X, Section 5 and was considered as the fountainhead of all local government taxing powers. The exercise of taxing power derives its source from the very existence of the state whose social contract with its citizens obliges it to promote public interest and common good. The theory behind the exercise of the power to tax emanates from necessity; without taxes, government cannot fulfill its mandate of promoting the general welfare and well-being of the people (Napocor v. City of Cabanatuan, G.R. No. 149110, April 9, 2003).
III – FUNDAMENTAL PRINCIPLES OF TAXATION
Section 130 provides the fundamental principles of taxation. Among others, (a) taxation shall be uniform in each local government unit; (b) taxes, fees, charges and other impositions shall be equitable and based as far as practicable on the taxpayer’s ability to pay; not be unjust, excessive, oppressive, or confiscatory. This specific section is otherwise referred to as the Statutory Limitations expressly provided by law.
Taxation Shall Be Uniform In Each Local Government Unit
Uniformity in taxation requires that all subjects or objects of taxation, similarly situated, are to be treated alike both in privileges and liabilities (British American Tobacco v. Camacho, G.R. No. 163583, April 15, 2009, 585 SCRA 36, cited in CIR v. Fortune Tobacco Corp., G.R. No. 180006, Set. 28, 2011). Uniformity in taxation has been defined as that principle by which all taxable articles or kinds of property of the same class shall be taxed at the same rate. And this principle is required only within the territorial jurisdiction of a province, city, municipality, or barangay. Thus, if the tax is a city tax, it must be uniform throughout the city; if the tax is a municipal tax, it must be uniform throughout the town.
This principle is religiously applied in the local government unit of Pandan. For example, all retailers within the territory of Pandan are similarly taxed at the same rate. On the other hand, the rates imposed on the business tax of wholesalers or manufacturers are different from that of the retailers but similar as to their kind. If there is any difference in the tax liability of retailers after the tax rate was applied is not due to its non-uniformity but due to the nature of their business operations, that is, one retailer has lesser gross sales compared to the other.
“Equitableness and Ability to Pay” Principle
The question as to when the tax is said to be “equitable” is related to the tax burden itself. Accordingly, there are two (2) generally accepted principles of apportioning the burden of taxation. One is the principle of “benefits received” where persons who desire to avail of government services or benefits are required to pay for their costs in the form of taxes. The second principle is the “ability to pay” where persons who possess more in wealth or income are required to bear the costs of government correspondingly to such capacity. Surely, a business retailer with a reported gross sales of 10 million pesos will be taxed more than that with reported gross sales of 100 thousand pesos. Again, this is being done in the local government unit of Pandan.
Tax Must not be Unjust, Excessive, Oppressive and Confiscatory
When is a tax unjust, excessive, oppressive or confiscatory? Tax ordinance carries with it the presumption of validity. The question of reasonableness of the tax rates though, is open to judicial inquiry. However, much should be left to the discretion of municipal authorities. Courts will go slow in writing off an ordinance as unreasonable unless the amount is so excessive as to be prohibitive (Victorias Milling Co., Inc. v. Municipality of Victorias, G.R. No. L-21183, Sept. 27, 1969).
In another case, the Court ruled that an increase of 300% in the rate of the tax alone was not sufficient to support the claim that it is oppressive, unjust and confiscatory since municipal corporations are allowed much discretion in determining the rates of imposable fees (Northern Tabacco Corp. v. Municipality of Agoo, G.R. No. L-26447, Jan. 30, 1970).
The above decisions pertain to increase in the rate of tax imposed. At the risk of being repetitious, it bears stressing that the local government of Pandan is using and applying the existing old revenue code wayback 2012. If there is any remarkable increase, so to speak, is not an increase in the imposable tax rate but increase in tax collection due to the application of various collection strategies for an effective and efficient tax collection.
IV – EXAMINATION OF BOOKS
One of the strategies employed in the collection of the correct amount of tax is the opening of the books of accounts of business owners. This is not a strategy pick from thin air. Just as the BIR has this power, local government units are also possessed with this authority as provided under Section 171 of the Local Government Code of 1991.
The so-called “fiscalizers”, who were in reality nothing but politically-frustrated individuals would like to impress upon their cult-followers that the treasury office, particularly this representation, as the Acting Municipal Treasurer possesses no legal basis to collect back taxes for five years. Pity are those who know not what they are saying.
Section 183, in relation to Section 194 of the Local Government Code of 1991 expressly provide for such legal basis. Section 183 specifically provides that local government units may enforce the collection of delinquent taxes, fees and charges or other revenues within the period prescribed under Section 184 of the same Code. Section 194, on the other hand, provides that assessment and collection of taxes may be done within a period of five (5) years. In fact, collection of delinquent taxes may be done within an extended period of ten (10) years or even more in cases of fraud or intent to evade payment, when the treasurer is legally prevented from making the assessment or collection, when the taxpayer requests for reinvestigation and executes a waiver in writing, or when the taxpayer is out of the country or otherwise cannot be located.
V – MALACANAN ORDERS LGUs AGAINST COLLECTING FEES
The politically-frustrated cult leader posted on social media with the caption: “Sana mabasa to ni Senen buda Takoy” with the intention to impress his followers of the violations committed by the concerned officials. I suggest and I say it now, in the spirit of fairness, before posting any excerpts or news article, I implore you to read and understand it carefully.
Even before the posting, I am very familiar with the content of that news article in Philippine Daily Inquirer as that was the subject of a Joint Memorandum Circular issued by the DILG and DOF which was circulated by the Bureau of Local Government Finance (BLGF) to all local government units, which this representation had personally received a copy.
That directive is an off-shoot of the complaint by the United Broilers Raisers Association Inc. (Ubra) that pertains to “Pass-Thru Fees” being imposed by LGUs (provinces and cities only) on their trucks and transport vehicles resulting in unnecessary delays in their deliveries, thus adding to their cost. The specific directive mention nothing about taxes rather it applies only to cities and provinces not to municipalities. Additionally, there was also a directive to LGUs against imposing fees to professionals once they already have paid their Annual Tax on Profession as imposed by the province.
VI – WORD OF ADVICE
There is nothing wrong in critiquing government officials, who are duty-bound to serve their constituents. Nothing prohibits a person from speaking up for any malfeasance, misfeasance or at most abuses committed. This is a right enshrined under the Constitution. However, this is not absolute. We are reminded that lies, mis/disinformation, false and baseless accusations have no room in a civilized, democratic system. Misleading and distorted information coupled with personal attacks bred divisiveness in the family or even in the community as a whole.
I am a true-blooded Pandananon. I grew up believing that Pandan is known to be the home of great leaders – Sen. Jose O. Very, Jose Cardinal Sanchez, Amb. Leandro I. Verceles, Sr. not to mention the two governors that this place produced. Let us not tarnish this great, brilliant image.