c. Community Tax

Local Government Revenue-Raising Powers and Construction of Tax Measures

Under the Local Government Code, the State policy provides that territorial and political subdivisions enjoy genuine and meaningful local autonomy, instituted through a system of decentralization granting local government units (LGUs) more powers, authority, responsibilities, and resources¹. A fundamental operative principle of local autonomy dictates that vesting duties and responsibilities in LGUs must be accompanied by adequate resources, specifically recognizing their power to create and broaden their own sources of revenue².

In the exercise of local revenue and taxation powers, statutory interpretation is governed by the following rules:

• Liberal interpretation of LGU powers: Any provision concerning an LGU's power must be liberally interpreted in its favor, with doubts resolved in favor of devolution of powers and the lower local government unit; any fair and reasonable doubt regarding the existence of the power must be interpreted in favor of the LGU³.
• Strict construction of tax measures: In case of doubt, any tax ordinance or revenue measure is construed strictly against the enacting LGU and liberally in favor of the taxpayer³.
• Strict construction of exemptions: Any tax exemption, incentive, or relief granted by an LGU pursuant to the Code must be construed strictly against the person claiming it³.