The paper discusses the basic data and information on the Community Tax (or Residence Tax). The Community Tax (or Residence Tax) was originally known as the cedula personal. Its enactment was the result of a reform decree abolishing the tribute. During the Spanish era, all residents above eighteen years of age regardless of nationality were required to pay this “new” tax. Upon payment, a cedula or residence certificate was issued to the taxpayer for identification and other purposes.
Under the Local Government Code (LGC) of 1991, the residence tax is referred to as the “community tax.” The LGC empowers cities and municipalities to levy an annual Community Tax on individuals and juridical persons.
The rates of the Community Tax are of two kinds, viz: Basic community tax - P 5.00 and the additional Community Tax at the rate of P 1.00 for every One Thousand Pesos (P 1,000.00) of income regardless of whether the income is from business, exercise of profession or from property but not to exceed Five Thousand Pesos (P5,000.00). For corporations, the basic community tax amounts to P 500.00 while the additional community tax shall not exceed P 10,000.00
Data indicate that revenue from the Community Tax increased from P 692 million in 2001 to P 884 million in 2005, posting an average growth rate of 6.36% during the five-year period. Its average contribution to total LGUs’ income from 2001-2005 is less than 1%.
Its insignificant average growth and contribution to total LGU income during the period could be due, among others, to the exclusion of wages or salaries as base of additional community tax, the underdeclaration of income, and the non-procurement of community tax certificates by some taxpayers. Due to lack of records, payment of the community tax had become an almost voluntary matter.
