Penalty TAX: Ax Distinguished From Other Charges

MODULE 3:
 Comparison of Tax from Other Charges and Fees

 System of Income Taxation
 Other Doctrines/Rules in Taxation
 Exemptions from Taxation
 Escape from Taxation
TAX DISTINGUISHED FROM OTHER CHARGES
PENALTY
TAX  It is imposed to regulate
conduct through punishment
 It is imposed to raise revenue
and suppression of injurious
 It is imposed only by the
act
government
 May be imposed by the
 It arises from law
government or by private
 Generally payable in money
individuals
 It may arise from law or
contract
 May be paid in money or in
SPECIAL ASSESSMENT
TAX
 Levied on land
 Levied or business, interests,
transactions, rights, persons,  Cannot be made the personal
properties or privileges liability of the person assessed,
because it is the land that
 May be made a personal
answers for the liability
liability of the person assessed
 Based wholly on benefits
 Based on necessity with no
received
hope of direct or immediate
benefit to the taxpayer  It is exceptional in application
for the recovery of cost and/or
 Is of general application
maintenance of improvement
LICENSE FEE
TAX
 License fee emanate from the
 Tax is levied in the exercise of
police power of the state
the taxing power
 The purpose of it regulatory
 The purpose of it is to
generate revenue  Limited to the necessary
expenses of regulation and
 Generally amount is unlimited
 Imposed on person, property,
rights or transaction
 Non-payment does not make
the business illegal
TAX
CUSTOMS DUTIES
 Imposed on person,
property, rights or  Imposed on imported or
transaction exported goods
 It comprehends more than  It is also a tax
the term custom duties
TAX
DEBT
 Based on law
 Based on contract
 Not assignable
 Assignable
 Payable in money
 Payable in kind or money
 Not subject to set-off
 Subject to set-off
 Non-payment may result to
 No imprisonment (except
imprisonment
when debt arises from crime)
 Bears interest only of
 Interest depend upon the
delinquent
stipulation of the parties
SUBSIDY
 Refers to a pecuniary aid directly granted by the government to an individual or private

commercial enterprise deemed beneficial to the public
 NOT A TAX although may have to be imposed to pay it.
REVENUE
 Refers to funds or income derived by the government, whether from tax on any other source.
 Amount collected
INTERNAL REVENUE
 Internal Revenue means taxes imposed by the legislature other than duties on imports and
exports
TARIFF
May be used in one of three (3) senses:
1. Book of rates drawn usually in alphabetical order containing the names of several kinds of
merchandise with the corresponding duties to be paid for the same, or:
2. The duties payable on goods imported or exported; or
3. The system or principle of imposing duties on the importation (or exportation) of goods.
SYSTEM OF “INCOME TAXATION”

Global System - All items of gross income, deductions are reported in one income tax return and
the applicable tax rate is applied on the tax base
Schedular System - Different types of income are subject to different sets of graduated or flat
income tax rates
OTHER DOCTRINES/RULES IN TAXATION
*Equitable Recoupment - Claim for refund which is prevented by prescription may be allowed to be
used as payment for unsettled tax liabilities if both taxes arise from the same transaction in which
overpayment is made and underpayment is due.
*Set-off taxes. Taxes are not subject to set-off or legal compensation because the government and
the taxpayer are not mutual creditors and debtors is due.
*Taxpayer’s Suit - This provides that a taxpayer suit can only be allowed if the act involves a direct
and illegal disbursement of public funds derived from taxation.
Taxpayer’s Suit
A case where the act complained of directly involves the illegal disbursement of public funds
derived from taxation. Taxpayers have locus standi to question the validity of tax measures or illegal
expenditures of public money. In such cases, they are parties in interest who will prejudiced or
benefited by the avails of suit. The general rule is that not only persons individually affected
Exemptions from Taxation
It is a grant of immunity, express or implied to particular persons, or corporations of a
particular class, from a tax upon property or an excise tax which persons and corporations generally
within the same taxing district, are obliged to pay
Taxpayer’s Suit
A case where the act complained of directly involves the illegal disbursement of public funds
derived from taxation. Taxpayers have locus standi to question the validity of tax measures or illegal
expenditures of public money. In such cases, they are parties in interest who will prejudiced or
benefited by the avails of suit. The general rule is that not only persons individually affected
CLASSIFICATION OF EXEMPTION
Express or affirmative - these provisions in the Constitution, statutes, treaties, ordinances,
franchises or contracts
Implied or exemption by omission- this occurs when the tax is levied on certain classes of
persons, properties or transactions without mentioning other classes. Those not mentioned are
deemed exempted by omission.
Interpretation of Exemption Grant
Exemption grants are strictly construed against the person or entity claiming exemption. One must
justify such claim by clear and positive grant.
ESCAPE FROM TAXATION
1. Evasion or Dodging, the taxpayer uses unlawful means to evade or lessen the payment of
tax
2. Avoidance, also called tax minimization, it is reduction or totally escaping payment of tax
through legally permissible means.
3. Shifting, basically, it is the transfer of tax burden to another. The imposition of tax is
transferred from the statutory taxpayer to another without violating the law.
IMPACT is the point t which a tax is originally imposed.

INCIDENCE is the point at which the tax burden finally rests or settles down.
THREE (3) KINDS SHIFTING
a. Forward Shifting
b. Backward Shifting
c. Onward Shifting
4. Capitalization, the seller is willing to lower the price of the commodity provided the taxes will
be shouldered by the buyer.
5. Transformation, the manufacturer absorbs the additional taxes imposed by the government
without passing it to the buyers for fear of lost of his/its marker. Instead, he/it increases
quantity of production, thereby turning their units of production at a lower cost resulting to the
transformation of the tax into a gain through medium of production
6. EXEMPTION, it is an immunity, privilege or freedom from payment of a change or burden to
which others are obliged to pay.
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MODULE 3:

 Comparison of Tax from Other Charges and Fees

TAX DISTINGUISHED FROM OTHER CHARGES

 Refers to a pecuniary aid directly granted by the government to an individual or private

SYSTEM OF “INCOME TAXATION”

IMPACT is the point t which a tax is originally imposed.

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