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Taxation Reviewer: Taxation in Act and Inherent Provide Money To Pay)

The document discusses taxation in the Philippines. It states that taxation is an exercise of sovereign power by the state and is vested in Congress to defray government expenses. It outlines several theories of taxation, including that taxes are necessary to fund government services. The purposes of taxation include promoting general welfare, regulating activities, reducing inequality, and encouraging economic growth. Principles of a sound tax system include fiscal adequacy, administrative feasibility, and theoretical justice based on taxpayers' ability to pay. Taxes can be levied on individuals, property, occupations, and are subject to restrictions on amount, purpose, and collection methods.

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Maria Elena Aquino
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94 views5 pages

Taxation Reviewer: Taxation in Act and Inherent Provide Money To Pay)

The document discusses taxation in the Philippines. It states that taxation is an exercise of sovereign power by the state and is vested in Congress to defray government expenses. It outlines several theories of taxation, including that taxes are necessary to fund government services. The purposes of taxation include promoting general welfare, regulating activities, reducing inequality, and encouraging economic growth. Principles of a sound tax system include fiscal adequacy, administrative feasibility, and theoretical justice based on taxpayers' ability to pay. Taxes can be levied on individuals, property, occupations, and are subject to restrictions on amount, purpose, and collection methods.

Uploaded by

Maria Elena Aquino
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Taxation Reviewer

Taxation exercise of sovereign power, the inherent power of the state.


Taxation in act and inherent
- Power vested to Congress.
- Defray the expenses of the Government, (Defray; provide money to pay)

Revenue Funds Collected.

Apportioning (Distribution) The cost of Government to individuals who receive


benefits.

Theories of Taxation
1. Life Blood Doctrine - Tax is the life blood. Taxes should sustain the
existence of the government. In need to inherent power to taxes.
2. Necessity Theory - There is a need to connect taxes for the Government
to give services to function.
3. Symbiotic Relationship - This involves the power of the State to
demand and receive taxes based on the reciprocal duties of support and
protection between the State and its citizen.
- Martial Doctrine - Pertains to the power to tax, also has true power to
destroy. (Example: In terms of Regulation)

“Taxation can be the implement to police power.”

- Holmes Doctrine - the power to tax is NOT the power to destroy but
BUILD and encourage business, as well as to contribute progress of the
economy. (Example: Creation of Economic Zones- BMA)

Purpose of Taxation
1. Promotion of General Welfare - Implement of Police power (not as to
the number but more of a purpose) The public in Character.
2. Regulation - Rehabilitation and Stabilization of Public Interest.
3. Reduction of Social Inequity - Progressive system of Taxation.
4. Encourage Economic Growth - Tax exemption Reliefs.
5. Protectionism - Importations; tariffs; and nature customs.
- Tariff’s purpose is to protect local industries.
 Inherent Attribute
 Legislative in Character
 Subject to constitutional & Inherent Limitation)

Characteristics
 Comprehensive
 Unlimited
 Plenary – the law enacted is clear already.
 Supreme – it can select individuals or subject exempt covers.

Principles of Sound Tax System


1. Fiscal Adequacy – amount to be collected.
- Revenue must be sufficient.
2. Administrative Feasibility – Effectively enforced with the least
inconvenience to the taxpayers. (Easily implemented)
- Self-assessment, easy to understand and comprehend.
3. Theoretical Justice – taxpayer’ ability to pay under progressive system.
4. Unconstitutional Tax Law – once contracted or signed it cannot be
change.
- Not uniform & equitable.

Scope and Limitations


1. Person, property, Occupation (Any is covered by tax)
2. Amount
3. Purpose – (Public purpose)
4. Kind of Tax – Direct; Indirect, specific or ad valorem (ad valorem – tax
base on the value)
5. Personal, property or privilege.
- Personal could be an individual
- Property could be Real Property Tax
- Privilege – Permit, business tax will be imported.
6. Apportionment – Form of collection, a certain form of tax; General or
limited.
7. Situs/Territoriality – all the things that happen within the area are
subject to pay tax. Subject Territoriality to pay taxes.
8. Method of Collection.
Legal interest – 6% per annum

Power of Eminent Domain – Private property, for public use.

Congress enacts laws pertaining to tax.

- Fiscal Adequacy – adequate to fund the government functions or


programs.
- Administrative Feasibility – Effectively enforced with the least
inconvenience to the taxpayers. (is it feasible for the Government to
propose.)
o Procedures, Payments.
- Theoretical Justice – Ability to pay theory.

Situs of Taxation
Territoriality – the place or authority that has the right to impose and
collect taxes.

- Government is exempted from taxation.


o Inherent Limitation – only those covered by the jurisdiction of the
PH government.

Situs of Income Taxes


1. Sources within the Philippines – all kind of taxpayers; derived from
activity within.
2. Sources outside the Philippines – only resident citizen and domestic
Corporation.
3. Partly within the part outside Philippines – determined by the
secretary of Finance.
- Example: Products made in PH for export.

Property Tax
1. Real property – where the property is located (Lex situs – where it is
located is the subject of protection.)
2. Personal Property – movable, follows the person (Domain of the person)
3. Partly within and partly outside PH –
Excise Tax
1. Estate Tax – Transfer of Property.
a. Citizen/Resident Alien; taxed in properties whenever restricted.
b. Non-resident alien: taxed on properties situated in PH.
2. Donor’s Tax – same status and location at the time of donation.

Situs of Business Taxes


1. On the sale
a. Real property – where located.
b. Personal Property – where perfected (Consummated; Constructive
delivery)
2. Value added Tax (VAT) – where transaction was made.

Stages of Taxation
1. Levy of Imposition (Tax Legislation) - The tax laws to be passed shall
determine those to be taxed (person, property or rights), how much is to
collect (the rate and the base of tax), and how taxes are to be
implemented (the manner of imposing and collecting tax, i.e. tax
remedies).
2. Assessment and Collection - This process involves the act of
administration and implementation of tax laws by the executive through
its administrative agencies such as the Bureau of Internal Revenue (BIR)
or Bureau of Customs (BOC).
3. Payment - This process involves the act of compliance by the taxpayer in
contributing his share to pay the expenses of the Government.
4. Refund - This is a process of claiming for tax illegally collected or
mistakenly paid.

Inherent Limitation of Taxation

Purpose for Public Nature

International Committee (Sovereign Equal)

Non-Deferability (Inherently Legislative) - the authority of tax power is


congress.

Exemption – government is exempted from taxation.

Situs Territoriality – within PH is subject to Tax.


“The Government can be taxed by their proprietary activities.” (Proprietary; an
owner)

Requisites for a valid Tax


a. Jurisdiction – jurisdiction of the covered authority.
b. Assessment and collection – guarantee notice and hearing that are
reasonable.
c. Uniform – applicable to all in the same class.
d. Limitation – should not violate inherent and constitutional limitations.

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