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    General Principles of Taxation

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    Ellah Mae
    The document discusses several key concepts regarding taxation: 1) Taxation is an inherent power of the state that is needed to support government functions and provide for the general welfare of citizens. 2) The power of taxation allows governments to raise revenue by imposing taxes on individuals, property, and activities within its jurisdiction. 3) There are limitations on the power of taxation - taxes must be for a public purpose, imposed uniformly and equitably, and within the territorial jurisdiction of the taxing authority.

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    General Principles of Taxation

    Uploaded by

    Ellah Mae
    38 views8 pages
    The document discusses several key concepts regarding taxation: 1) Taxation is an inherent power of the state that is needed to support government functions and provide for the general welfare of citizens. 2) The power of taxation allows governments to raise revenue by imposing taxes on individuals, property, and activities within its jurisdiction. 3) There are limitations on the power of taxation - taxes must be for a public purpose, imposed uniformly and equitably, and within the territorial jurisdiction of the taxing authority.

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    The document discusses several key concepts regarding taxation: 1) Taxation is an inherent power of the state that is needed to support government functions and provide for the general welfare of citizens. 2) The power of taxation allows governments to raise revenue by imposing taxes on individuals, property, and activities within its jurisdiction. 3) There are limitations on the power of taxation - taxes must be for a public purpose, imposed uniformly and equitably, and within the territorial jurisdiction of the taxing authority.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    38 views8 pages

    General Principles of Taxation

    Uploaded by

    Ellah Mae
    The document discusses several key concepts regarding taxation: 1) Taxation is an inherent power of the state that is needed to support government functions and provide for the general welfare of citizens. 2) The power of taxation allows governments to raise revenue by imposing taxes on individuals, property, and activities within its jurisdiction. 3) There are limitations on the power of taxation - taxes must be for a public purpose, imposed uniformly and equitably, and within the territorial jurisdiction of the taxing authority.

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    © All Rights Reserved
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    of 8

    General Principles of Taxation

    Taxation

    - Often associated with negative thoughts, however must take note of its positive attributes
    o Supports the people
    o General welfare of the people

    Inherent powers of the state

    Source of the power of the government in imposing taxes

    Inherent, therefore natural, given, automatically granted; needed for the government to properly exist

    POLICE POWER

    Tests: Lawful subject ; lawful means

    - promote public welfare by restraining and regulating use of liberty and property
    - most pervasive, least limitable, most demanding
    o as the people are important and so their protection is necessary
    - by: legislative department

    POWER OF EMINENT DOMAIN

    Tests: necessity; private, taking of the private property; public use; just compensation

    - power of expropriation with just compensation


    - by:
    o congress
    o president
    o local legislative bodies
    o public corporations
     Land Authority and National Housing Authority
    o Quasi-public/ private corporations for public utilities
     MCWD, Philippines National Railways, VECO

    POWER OF TAXATION

    - Power to raise revenue through enactment of laws that impose charges upon persons,
    properties, activities under its jurisdiction, to defray government expenses
    - Purpose
    o Primary: Revenue
     to meet government objectives
    o Secondary: regulatory ; compensatory
     More taxes; to achieve a certain effect or condition; police power through
    power of taxation
     Cigarettes; alcoholic, petroleum, sugar-sweetened products
     Less taxes; motivate continuation of orgs for social or economic needs
    regardless whether revenue is raised or not; address inequality of wealth
    distribution

    Similarities of the Inherent Powers

    - Inherent
    - Independent of constitution
    o Constitution sets limit only to protect the powerless
    - Interfere with private rights; always gets something but also gives
    o Freedom, property, money
    - Legislative
    - Direct or indirect compensation is given

    Differences of the Inherent Powers

    - ED can be exercised by public service companies/ utilities aside from government


    - Different purposes
    o General welfare; public use; support government
    - Persons affected
    o Community; owner; community
    - Benefits received/ compensation given
    o Indirect; direct; indirect
    - Amount of imposition/ amount collected
    o Limited/ Sufficient for requirement; none; Unlimited
    - Impairment of contracts
    o Superior= invalidate; superior; inferior

    Aspects of Taxation

    Process/ Cycle of taxation

    LEVYING/ IMPOSITION (Impact of taxation)

    - Legislative
    - Law-making

    ASSESSMENT (Incidence of taxation)


    - Administrative
    -
    - Computes;

    COLLECTION (Incidence of taxation)

    - Administrative
    - Ask for payment

    PAYMENT

    - On part of paying public

    Theory of taxation

    LIFEBLOOD THEORY

    - Taxes are the blood of the government, without it the government will not survive, leading to
    detriment in society
    - Supporting concepts
    o Rule of no estoppel against the government
    o Collection of taxes cannot be prohibited by injunction/ a court order
     Exception: CTA
    o Taxes cannot be the subject of compensation/ set-off
     Because the government and taxpayer are not mutual creditor and debtor of
    each other
     Exception: if the budget is already available
    o Rights to select object of taxation by legislation (congress), including
     Purpose
     Amount
     Kind
     Apportionment
     Situs
     Means of collection
    o Valid Tax may result in the destruction of the taxpayer’s property
     Power to destroy

    Basis of Taxation

    BENEFIT RECEIVED OR RECIPROCITY THEORY

    - Government provide benefits to the people, so the people, in return should provide the funds to
    support government
    - Since the government needs to provide services to the people, the people in return needs to pay
    taxes; mutuality of support
    - No benefits received can never be a defense to non-payment of taxes

    Scope of Taxation

    SUPREME

    PLENARY

    UNLIMITED

    COMPREHENSIVE

    Inherent Limitations

    Elements or characteristics of taxation

    PUBLIC PURPOSE

    - for greater portion of nation; for community rather than individuals


    o construction of catholic church = X

    NO IMPROPER DELEGATION

    - inherently legislative (congress)


    - Exceptions (allowed by congress themselves)
    o Local government
    o President
     Fix taxes related to foreign relations
    o Administrative bodies
     to implement the law

    UNDER TERRITORIAL JURISDICTION

    - impose taxes only within territorial boundaries


    - exceptions
    o resident citizens’ foreign income
    o treaty obligation exemption
    o international comity exemption

    Situs of Taxation

    Place/authority with the right to impose and collect taxes from the taxpayer

    Depends on the object of taxation (person, property, activity)

    Person; personal, poll or capitation tax – RESIDENCE/ CITIZENSHIP


    Excise tax (tax on privileges); income tax; business tax – STATE WHERE RIGHT/ ACTIVITY IS CONDUCTED

    Real property tax – LOCATION OF THE PROPERTY

    Tangible personal property tax – LOCATION OF THE PROPERTY

    Intangible personal property tax – STATE WHERE THE RIGHT TO THE PROPERTY IS EXERCISED e.g.
    where the debtor is (receivables), where the corporation is (shares of stocks)

    EXEMPTION OF GOV. ENTITIES

    - Exemption when: there’s too expensive collections >>> assumed for profit already

    INTERNATIONAL COMITY

    - COMITY: respect between nations because they are sovereign equals; no supreme ruler
    between them; they don’t subject themselves to the jurisdiction of one when they enter one’s
    territory

    Bureau of Internal Revenue

    Department of Finance

    Vision: institution of service excellence and integrity

    Mission: justly collect taxes for the betterment of the people

    POWERS

    - Tax assessment and collection


    - Enforcement of
    o Forfeitures, penalties, fines, judges
    - Giving effects to and administering supervisory and police powers conferred to it by the NIRC
    and other laws

    POWERS OF COMMISIONER OF INTERNAL REVENUE

    - Interpret tax laws (issuance of revenue regulations)


    o Only recommends, finalized by secretary of department of finance
    - Decide cases
    o Disputed assessments
    o Refunds
    o Penalties
    o Others
    - Verify correctness of returns (summons, examination, take testimony)
    o Extent
     Examine any document for investigation; summon
     Go to third parties
    - Make assessments and prescribe additional requirements
    - Conduct inventory taking
    - Prescribe presumptive gross sales
    - Close businesses
    - Prescribe real property values
    - Lower tax liabilities of taxpayers when
    o Insolvent/ bankrupt
    o Excessive assessment
    - Inquire in bank deposits only when
    o Estate of a decedent
    o Claims of financial incapacity
    - …

    Non-delegable powers of CIR

    - Recommend to secretary of finance


    - Issue ruling of first time cases
    - Lessening tax liability
    o Except: basic deficiency tax of P500,000 or less; minor criminal violations
    - Assign officers to establishments subject to excise tax

    Tax

    Elements

    - By who has power over the object of taxation


    - Not violates constitutional and inherent limitations
    - Uniform and equitable
    - For public purpose
    - Proportional in character
    - Payable in money, generally only
    o Can be through forfeiture of properties

    Definition

    - Enforced contribution to raise revenue for public purpose

    Classification of taxes

    - Purpose
    - Subject matter
    - Incidence
    - Amount
    - Rate
    - Imposing authority

    Tax vs Toll

    - Tax: levy of government; demand of sovereignty


    - Toll: charge for use of other’s property; demand of ownership
    - Amount: tax depends on needs of government; toll depends on value of property leased

    Tax vs Debt

    - Source is law; contract


    - Leads to imprisonment; does not
    - Not subject to set-off; subject
    - Generally payable in money; payable in dacion en pago
    - Interest when taxpayer is delinquent; when stipulated or with delay

    Tax vs Special Assessment

    - Imposed upon persons, property, privileges; lands adjacent to public improvement


    - Without expectation of benefit; benefit in appreciation of land due to improvement

    Tax vs Tariff

    - Tax is broader
    - Tariff imposed on imported or exported commodities

    Tax vs license

    - After; before

    Types of taxation laws

    TAXATION LAWS

    - NIRC
    - Tariff and customs code
    - Local tax code
    - Real property tax code

    TAX EXEMPTION LAWS

    - Minimum wage law


    - Omnibus investment code
    - Barangay micro business enterprise law
    - Cooperative development act
    - NIRC partly too
    Sources of tax laws

    PHLIPPINE CONSTITUTION

    STATUTES AND PRESIDENTIAL DECREES

    JUDICIAL DECISIONS/ CASE LAWS

    EXECUTIVE ORDERS AND BATAS PAMBANSA

    ADMINISTRATIVE ISSUANCES

    TAX TREATIES AND CONVENTIONS WITH FOREIGN COUNTRIES

    Types of administrative issuances

    REVENUE REGULATIONS

    R MEMORANDUM ORDERS

    RM CIRCULARS

    RM RULINGS

    R BULLETINS

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