A lecture on Taxation

2. Taxation is important to everyone. It
encompasses every area of our daily life,
including property, family, employment, and our
daily transaction as well as business affairs.
“Taxation” is defined as the process of raising sufficient
fund through the legislative body of the state to for and
support the necessary expenses of the government.

3. 1. “Theory of necessity” which means that there
is a need for a government and therefore the
people must fund this government by paying their
taxes.
2. “principle of Reciprocity” which means that the
government protects the life, liberty and property
of the people and in return support the
government by paying their taxes.

4. 1. “Taxation” the state has the power to raise money to
finance the necessary expenses of the government.
2. “Eminent Domain” the state has the power to take
private property for public use provided that a just
compensation must be made to the private owners of
the said property.
3. “Police Power” the state has the power to levy taxes
which are sufficient enough to provide protecte1ion for
the well being of the people.

5. 1. “Inherent Power” taxation can exist
independently without the specific grant by the
power of the constitution.
2. “Legislative Power” taxation is carried out by
the legislative through the enactment of statutes..

6. 1. Fiscal Adequacy. the source of taxation must
be adequate or sufficient enough to sustain
government expenditures and its objectives.
2. Theoretical Justice. Taxes to be paid must be
based on the ability to pay.
3. Administrative Feasibility. Tax laws must be
concise or brief, must be enforceable, attainable
must not be burdensome upon the taxpayers.

7. The power of taxation belongs to the control of the state. It is however, subject
to constitutional and inherent limitations. Constitutional limitations are those
presented for in the constitution while Inherent limitations are those precincts
that exist independently outside the power of the constitution.
Inherent Limitation
1. Purpose. Raising of funds through taxes may be used for public
purpose only.
2. Territoriality. The state may only tax persons and property
under its territorial power.
3. Double Taxation. No property shall be taxed twice by the state
for the same reason.
4. Exemption. Agencies of the government are tax exempt.
5. Non-delegation. The power to tax by the legislative body may
not be delegated to any other branch.

8. Taxes obligatory contributions which are proportionate to the
ability of persons and institutions to sustain and support
government needs for public purpose.
Essential characteristics of tax:
1. Obligatory or compulsory contribution
2. Charged by lawmaking body
3. Impartial in characteristics
4. Payable in money
5. Obligatory for the purpose of raising funds
6. For public use only

9. 1. Based on subject matter or object
a. Personal, poll or capitation. Fixed amount of tax imposed
upon all people. Ex. Residence Tax
b. Property. Taxed which amount is based and computed on
the valuation of property and evaluated by the assessors. Ex.
Real State Tax.
c. Excise. Sometimes called duty is tax imposed on the
manufacturing of goods produced within a country. It is a tax
for the production or sale of goods.

10. 2. Based on who bears the burden.
a. Direct. Taxes levied against persons and are paid directly to
a tax collecting agency of the government. Ex. Community tax,
Income tax, estate tax.
b. Indirect. Taxes and levied against goods and services and
charged only indirectly on people in form of sales taxes. Ex.
Customs duties, value-added.

11. 3. Based on determination of amount.
a. Specific. Tax imposed according to the physical quantity of
goods, as per item, yard, weight, or volume.
Ex. Tax on distilled spirits, Fermented liquors, Cigars.
b. advalorem. Tax of a fixed amount based on the value of
personal property or real state.
Ex. Real state tax, excise taxes on cigarette, gasoline and
others.

12. 4. Based on purpose
a. Revenue. Tax imposed throughout the country raised for
whatever needs of the government mat raise.
ex. Income tax
b. Special. Tax imposed or levied for a special purposed.
ex. Protect local industries.

13. 5. Based on the authority who imposes the tax
a. National. Tax charged by the national government
ex. Internal revenue taxes.
b. Municipal or local. Tax charged by the local government
ex. Real estate taxes.

14. 6. Based on graduation or rate
a. Proportional. Tax of a fixed or uniform amount.
ex. 12% value-added tax, percentage taxes
b. Progressive or graduated. Tax tends to increase as the tax
base increases.
ex. Income tax
c. Regressive. Tax tends to decrease as the tax base increases.
The regressive tax system is not practiced in the Phiippines.

15. Tax Evasion occurs when illegal efforts are
made to escape the payment of a tax.
Tax Avoidance occurs when legally permissible
attempts are made to minimize or reduce the
tax to be paid.