2. Taxation
-Is the process or means by
which the sovereign, through
its lawmaking body, raises
income to defray the
necessary expenses of the
government.
3. State Powers
1. Taxation- The power of the state by which
the sovereign raises revenue to defray the
necessary expenses of the government.
2. Eminent Domain- The power of the state to
take private property for public use upon
payment of just compensation.
3. Police Power- The power of the state to
enact laws to promote public health, public
safety and the general welfare of the people.
4. Aspects of Taxation
1. Levying of Tax- the imposition
of tax requires legislative
intervention. In the Philippines it is
the Congress that levies taxes.
2. Collection of the tax levied-
This is essentially an
administrative function.
5. Basic Principles of a Sound Tax
System
1. Fiscal Adequacy- Sources of revenue
are sufficient to meet government
expenditures.
2. Equality or theoretical justice- The tax
imposed must be proportionate to
taxpayer’s ability to pay; and
3. Administrative feasibility- The law must
be capable of convenient, just and
effective administration.
6. Limitations on the power of
Taxation
1. Purpose- Taxes must be levied for public
purpose.
2. Territoriality- The state may tax persons and
properties under its jurisdiction.
3. International comity- The property of the
foreign state may not be taxed by another.
4. Exemption- governmental agencies
performing governmental functions are exempt
from taxation.
5. Non-delegation- The power to tax being
legislative in nature may not be delegated.
7. Situs of Taxation
Situs- the place of taxation
Factors:
1. Subject matter- or what is being taxed
(person, property or an activity)
2. Nature of tax- or which tax to impose (income,
real property)
3. Citizenship of the taxpayer
4. Residence of the taxpayer
8. Situs of Taxation
Persons- Residence of the taxpayer
Real property or tangible personal property- Location of
the property
Intangible personal property- situs is the domicile of the
owner unless he has acquired a situs elsewhere.
Income- taxpayer’s residence or citizenship, or place
where the income was earned.
Business, occupation or transaction- place where
business is being operated, occupation being practiced
and transaction completed.
Gratuitous transfer of property- taxpayer’s residence or
citizenship or location of the property.
9. Double Taxation
DIRECT DUPLICATE TAXATION
- THE SAME SUBJECT IS TAXED TWICE WHEN IT
SHOULD BE TAXED ONCE, IN A FASHION THAT
BOTH TAXES ARE IMPOSED FOR THE SAME
TAXABLE PERIOD AND FOR THE SAME
JURISDICTION WITHIN THE SAME JURISDICTION OR
TAXING DISTRICT, FOR THE SAME TAXABLE
PERIOD AND FOR THE SAME KIND OR CHARACTER
OF A TAX, THEN IT BECOMES LEGALLY
OBJECTIONABLE FOR BEING OPPRESSIVE AND
INEQUITABLE.
10. TAXES
Are enforced proportional
contributions from persons and
property levied by the lawmaking
body of the State by virtue of its
sovereignty for the support of the
government and all public needs.
11. TAXES
Charateristics
1. it is an enforce contribution.
2. it is levied by the lawmaking body
3. it is proportionate in character
4. it is generally payable in money
5. it is imposed for the purpose of
raising revenues
6. it is to be used for public purpose
12. Classification of Taxes
1. as to subject matter or object
A. Personal, poll or capitation- tax of a
fixed amount imposed on individuals,
whether citizens or not, residing within
a specified territory without regard to
their property or the occupation in
which they may be engaged.
Example: Community Tax
13. Classification of Taxes
1. as to subject matter or object
B. Property- tax imposed on property,
whether real or personal, in proportion
either to its value or in accordance
with some other reasonable method
of apportionment. Example: real
estate tax.
14. Classification of Taxes
1. as to subject matter or object
C. Excise- tax imposed upon the
performance of an act, the enjoyment
of a privilege or the engaging in an
occupation. Example: estate tax,
donor’s tax, income tax.
15. Classification of Taxes
2. As to who bears the burden
A. Direct- tax demanded from persons
who are intended or bound by law to
pay the tax. Examples: community
tax, income tax, estate tax, donor’s
tax.
B. Indirect- tax the taxpayer can shift
to another. Example: Value added
tax.
16. Classification of Taxes
3. As to determination of amount.
A. Specific- tax imposed based on a
physical unit of measurement, as by
head or number, weight, length or
volume. Examples: tax on distilled
spirits, cigars, wines, fireworks.
B. Ad Valorem- tax of a fixed
proportion of the value of property.
Example: real estate tax.
17. Classification of Taxes
4. As to purpose.
A. General, fiscal or revenue- tax with no
particular purpose or object for which the
revenue is raised. Example: income tax, VAT.
B. Specific or regulatory- tax imposed for a
special purpose regardless of whether revenue
is raised or not and is intended to achieve some
social or economic end. Example: custom duties
on some products.
18. Classification of Taxes
5. As to Authority imposing the tax or
scope
A. National- tax imposed by the
national government. Examples;
Internal revenue taxes, customs
duties.
B. Municipal or local- tax imposed by
municipal government. Ex: real estate
tax
19. Classification of Taxes
6. As to graduation or rate
A. Proportional- tax based on a fixed
percentage of the amount of the property
income or other basis to be taxed.
Example: VAT, estate taxes
B. Progressive or graduated- tax rate
increases as the tax base increases.
Example: income tax, donor’s tax
C. Regressive- tax rate decreases as the
tax base increases.
20. Tax distinguished
1. from Toll- toll is the sum of money
for use of something- for the use of
road, bridge or the like.
A toll is demand of proprietorship
while tax is demand of sovereignty.
2. from Penalty- penalty is any
sanction imposed as a punishment for
violation of law or acts deemed
injurious.
21. Tax distinguished
3. From special assessment-
assessment is an enforced
proportional contribution from owners
of lands for special benefits resulting
from public improvements
4. from permit or license fee- permit or
license fee is a charge imposed under
the police power for purposes of
regulation.
22. Tax distinguished
5. From debt- a debt is generally based on
contract, is assignable and may be paid in
kind.
6. from revenue- is broader than tax since
it refers to all funds or income derived by
the government taxes included.
7. from customs duties- custom duties are
taxes imposed on goods exported or
imported to a country.
23. Tax Evasion VS. Tax Avoidance
Tax avoidance happens when the
taxpayer minimizes his tax liability by
taking advantage of legally available
tax planning opportunities.
Tax minimization; tax planning
Tax Evasion occurs when the
taxpayer resorts to unlawful means to
lessen or to get away with his tax
liability. Tax dodging.
24. BIR
The BIR functions under the
supervision and control of the DOF.
The mission of the BIR is to collect
taxes efficiently and effectively, for
and at least cost of the government,
through impartial and consistent
enforcement of internal revenue laws
and convenient and honest service to
taxpayers.
