Taxation by vivienne cemine


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This was the informative seminar on the basic taxation principles in the Philippines. It was an hour-long speech on the basics of the Philippine Tax system presented to the students of the Mindanao State University - Iligan Institute of Technology on 12 August 2011 for the Political Science 2 Lecture Series by Vivienne Cemine.\. The document was uploaded by JR Lopez Gonzales of

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  • Nature of Taxation: inherent power & legislative power
  • state increases taxes on harmful substances making them more expensive, thus limiting their consumption (ex. Sin Tax)
  • The first known system of taxation was in Ancient Egypt around  3000 BC - 2800 BC in the first dynasty of the Old Kingdom. [9]  Records from the time document that the pharaoh would conduct a biennial tour of the kingdom, collecting tax revenues from the people. Other records are granary receipts on  limestone flakes  and papyrus. [10] In Greece A tax referred to as Eisphora was imposed only in times of war In Athens A monthly tax called Metoikon was collected to foreigners Ancient Greek Taxation Taxation was used as an emergency power. Additional resources gained from war were used to refund tax previously collected from the people
  • Communitarianism  is an ideology that emphasizes the responsibility of the individual to the community and the social importance of the family unit.
  • Taxation by vivienne cemine

    1. 1. TAXATION Vivienne Jonnah R. Cemine Department of Political Science, MSU-IIT
    2. 2. <ul><ul><li>A. Taxation, In General </li></ul></ul><ul><ul><li>B. History of Taxation </li></ul></ul><ul><ul><li>C. Taxation in the Philippines </li></ul></ul><ul><ul><li>D. Kinds of Taxes </li></ul></ul>
    3. 3. Taxation Defined <ul><li>The inherent power of the state </li></ul><ul><li>- exercised through the legislature </li></ul><ul><li>To impose burdens </li></ul><ul><ul><li>- upon subjects and objects </li></ul></ul><ul><ul><li>- within its jurisdiction </li></ul></ul><ul><ul><ul><ul><li>For the purpose of raising revenues </li></ul></ul></ul></ul><ul><ul><ul><ul><li>To carry out the legitimate objectives of the government </li></ul></ul></ul></ul>
    4. 4. Theory of Taxation <ul><li>Lifeblood Theory </li></ul><ul><li>- Without revenue raised from taxation, the government will not survive , resulting in </li></ul><ul><li>detriment to society </li></ul><ul><ul><li>- Performance of governmental functions redounds to the benefit of the populace in general </li></ul></ul><ul><ul><li>- Revenues could be raised to defray expenditures for public purposes </li></ul></ul>
    5. 5. Basis of Taxation <ul><li>Symbiotic Relationship </li></ul><ul><li>- The reciprocal relation of </li></ul><ul><li>protection and support between </li></ul><ul><li>the state and the taxpayers </li></ul><ul><ul><li>- The state gives protection and for it to continue giving protection, it must be supported by the taxpayers in the form of taxes </li></ul></ul>
    6. 6. Purposes of Taxation <ul><li>The basic purpose </li></ul><ul><li>- Revenue purpose: to raise funds to meet the objectives of government </li></ul><ul><li>To secondary purposes </li></ul><ul><ul><li>- Sumptuary or regulatory purpose : to promote the general welfare; ex. Sin Tax </li></ul></ul><ul><ul><li> - Compensatory purpose: to maintain high level of employment thru the acceleration of infrastructure projects </li></ul></ul>
    7. 7. Canons of Taxation <ul><li>Principles of a Sound Tax System </li></ul><ul><li>- Fiscal adequacy : must be able to provide sufficient revenues to meet the objectives of government </li></ul><ul><ul><li> - Administrative feasibility : should easily be implemented to assure the smooth flow into the treasury of the fiscally adequate amounts </li></ul></ul><ul><ul><li> - Theoretical justice : should be collected premised on the ability to pay </li></ul></ul>
    8. 8. History <ul><li>Reign of Egyptian Pharaohs </li></ul><ul><ul><ul><li>Pharaoh would conduct a biennial tour </li></ul></ul></ul><ul><ul><ul><li>of the kingdom </li></ul></ul></ul><ul><li>Earliest taxes in Rome </li></ul><ul><ul><ul><ul><ul><li>Taxes known as Portoria were customs duties on imports and exports </li></ul></ul></ul></ul></ul><ul><ul><ul><li> - Augustus Caesar introduced the inheritance tax to provide retirement funds for the military. </li></ul></ul></ul>
    9. 9. History <ul><li>In England </li></ul><ul><ul><ul><li>Taxes were first used as an emergency measure </li></ul></ul></ul><ul><li>In the Philippines </li></ul><ul><ul><ul><li>The pre-colonial society, being communitarian, </li></ul></ul></ul><ul><ul><ul><li>did not have taxes </li></ul></ul></ul>
    10. 10. History <ul><li>In Modern Industrial Nations </li></ul><ul><ul><ul><li>The government designates a tax base (such as income, property holdings, or a given commodity) </li></ul></ul></ul><ul><ul><ul><li>- A Tax Law is a body of rules passed by the legislature by which the government acquires a claim on taxpayers to convey, transfer and pay to the public authority </li></ul></ul></ul>
    11. 11. Taxation in the Philippines <ul><li>Tax law in the Philippines covers national and local taxes: </li></ul><ul><li>National taxes: refer to national internal revenue taxes imposed and collected by the national government through the Bureau of Internal Revenue (BIR) </li></ul><ul><ul><ul><ul><ul><li>Local taxes: refer to those imposed and collected by the local government. </li></ul></ul></ul></ul></ul>
    12. 12. Taxation in the Philippines <ul><li>The 1987 Philippine Constitution sets limitations on the exercise of the power to tax: </li></ul><ul><li>“ The rule of taxation shall be uniform and equitable . The Congress shall evolve a progressive system of taxation.  </li></ul><ul><li> (Article VI, Section 28, </li></ul><ul><li>paragraph 1) </li></ul>
    13. 13. Taxation in the Philippines <ul><li>The Constitution expressly grants tax exemptions: </li></ul><ul><li>“ Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, and non- profit cemeteries and all lands, buildings and improvements actually, directly and exclusively </li></ul><ul><li>used for religious, charitable or educational purposes .” </li></ul><ul><li>(Article VI, Section 28, paragraph 3) </li></ul>
    14. 14. Taxation in the Philippines <ul><li>National Internal Revenue Law: codifies all tax provisions, the latest of which is embodied in Republic Act No. 8424 (The Tax Reform Act of 1997) </li></ul><ul><ul><li>- Taxpayer : any person subject to tax whose sources of income is derived from within the Philippines </li></ul></ul><ul><ul><li>- Taxpayer Identification Number (TIN) is required for any individual taxpayer </li></ul></ul>
    15. 15. Kinds of Taxes <ul><li>Income Tax </li></ul><ul><ul><li>- T ax on a person's income, emoluments, profits arising from property, practice of profession, conduct of trade or business </li></ul></ul><ul><ul><ul><li>Donor’s Tax </li></ul></ul></ul><ul><ul><li>- Tax imposed on donations inter-vivos or those made between living persons to take effect during the lifetime of the donor </li></ul></ul><ul><ul><ul><ul><ul><li>Estate Tax </li></ul></ul></ul></ul></ul><ul><ul><li>- Tax on the right of the deceased person to transmit property at death </li></ul></ul>
    16. 16. Kinds of Taxes <ul><li>Value-added Tax (VAT) </li></ul><ul><ul><li>- T ax on consumption levied </li></ul></ul><ul><ul><li>on the sale, barter, exchange or lease of goods or properties and services in the Philippines and on importation of goods into the Philippines </li></ul></ul><ul><ul><ul><ul><ul><li>Capital Gains Tax </li></ul></ul></ul></ul></ul><ul><ul><li>- Tax imposed on the gains presumed to have been realized by the seller for the sale, exchange or other disposition of real property located in the Philippines </li></ul></ul>
    17. 17. Kinds of Taxes <ul><li>Excise Tax </li></ul><ul><ul><li>- Tax applicable to specified goods manufactured in the Philippines for domestic sale or consumption </li></ul></ul><ul><ul><ul><li>Documentary Stamp Tax </li></ul></ul></ul><ul><ul><li>- Tax on documents, instruments, loan agreements and papers, agreements evidencing the acceptance, assignments, sale or transfer of an obligation, rights or property incident thereto </li></ul></ul>
    18. 18. Who Pays Taxes <ul><li>Resident citizens </li></ul><ul><ul><li>- T axed on all their net income derived from sources within and without the Philippines </li></ul></ul><ul><ul><ul><ul><ul><li>Alien individuals </li></ul></ul></ul></ul></ul><ul><ul><li> - W hether a resident or not, is taxable only on income derived from sources within the Philippines </li></ul></ul>
    19. 19. Philippine Tax Rates <ul><li>Income Tax Rate - 3 2% </li></ul><ul><li>Corporate Tax Rate - 30 % </li></ul><ul><li>Value Added Tax Rate – 12% </li></ul>
    20. 20. Tax Avoidance <ul><li>The exploitation by the taxpayer of legally permissible alternative rates or methods of assessing taxable property or income to reduce or entirely avoid tax liability </li></ul><ul><li>- Availing of all deductions allowed by law of refraining from engaging in activities subject to tax </li></ul>
    21. 21. Tax Evasion <ul><li>A scheme used outside those lawful means and when availed of, it usually subjects the taxpayer to further or additional civil or criminal liabilities: </li></ul><ul><li>- Under-declaration of income </li></ul><ul><ul><li>- Non-declaration of income and other items subject to tax </li></ul></ul><ul><ul><li>- Under-appraisal of goods subject to tariff </li></ul></ul><ul><ul><li>- Over-declaration of deductions </li></ul></ul>
    22. 22. Tax Avoidance v. Tax Evasion <ul><li>VALIDITY: </li></ul><ul><li>Legal ; not subject to illegal ; subject to </li></ul><ul><li>criminal penalty criminal penalty </li></ul><ul><li>EFFECT: </li></ul><ul><li>Minimization of taxes Almost always results in absence of tax payments </li></ul><ul><li>MEANS & METHOD </li></ul><ul><li>Legal ; valid means Illegal methods </li></ul>
    23. 25. Thank you! Vivienne Jonnah R. Cemine Department of Political Science, MSU-IIT