2. WHAT IS TAX?
• TAXATION is defined in many ways.
• It is the process by which the sovereign, through its
law making body, races revenues use to defray
expenses of government.
• It is a means of government in increasing its revenue
under the authority of the law, purposely used to promote
welfare and protection of its citizenry.
• It is the collection of the share of individual and
organizational income by a government under the
authority of the law.
3. PURPOSE & SIGNIFICANCE OF TAX
• Primary Sources: generates funds or revenues use to
defray expenses incurred by the government in
promoting the general welfare of its citizenry. Public
expenditure.
• Other purposes: to equitably contribute to the wealth of
the nation.
5. TAXATION IN SPANISH PERIOD
• When spaniards came, they started to collect “tributos” (tributes).
• The purpose of it is to develop and improve the islands and to maintain it as well
• also, the collect tributes is for the government officials salary and for the
expenses of the clergy
• The Filipinos have gotten satisfied with the production of agriculture
• Later on, half of the tribute was paid in cash and the rest with produce.
• Sixteenth century. Manila-Acapulco trade (The Galleon Trade) The Spanish
government continued trade relations with these countries and Manila became the
Center of Commerce -China, Japan, Maluccas, Siam, India, Cambodia, Borneo
• During the Galleon trade, force labor was a character of spanish colonial
taxation and was required from the Filipinos. Male Filipino were obligated to serve
which results to deaths in seventeenth century. Males are required to provide 40
days per annum.
• 1884, The payment of tribute was put to a stop because of the “cedulla” •
Taxation in the Philippine during spanish colonial period was characterized by a
heavy burden place.
7. • Americans aimed to make the economy self-sufficient by
running the government with the possible sum revenue
and create surplus in the budget.
• • From 1898 to 1903, the Americans followed the
Spanish system of taxation with some modifications.
• • Later on, the Urbana would be replaced by tax on real
state, which became known as land tax.
• • The problem with the tax was that land titling in the
rural area was very disorderly
8. The Internal Revenue Law of 1904- was passed as a reaction to the
problems of collecting land tax. It prescribed ten major sources of
revenue:
1. licensed taxes on firms dealing in alcoholic beverages and tobacco,
2. excise taxes on alcoholic beverages and tobacco products,
3. taxes on banks and bankers,
4. Document stamp taxes,
5. the cedula,
6. taxes on insurance and insurance companies,
7. taxes on forest products,
8. mining concessions,
9. taxes on business and manufacturing, and
10. occupational licenses.
9. • In 1907, some provinces were authorized to double the
fee for the cedula to support the construction and
maintenance of the roads. The industria tax was levied
on the business community according to their
profitability.
10. • In 1913, the Underwood-Simmons Tariff Act was passed,
resulting in a reduction in the revenue of the government
as export taxes levied on sugar, tobacco, hemp, and
copra were lifted.
11. • In 1914, an income tax was introduced; in 1919, an
inheritance tax was created; and in 1932, a national
lottery was established to create more revenue for the
government. However, these new creations were not
enough to increase government revenue
13. in 1937, the cedula tax was abolished, which prepared to be a progressive
move; but in 1940, a residence tax was imposed on every citizens aged 18
years old and on every corporation. In 1939, the Commonwealth drafted the
National Internal Revenue Code, introducing major changes in the new tax
system as follows:
1. The normal tax of three percent and the surtax on income was replaced by
a single tax and progressive rate.
2. Personal exemptions were reduced
3. Corporation income tax slightly increased by introducing taxes on inherited
estates or gifts donated in the name of the dead persons.
4. The culminative sales tax was replaced by a single turnover tax of 10% on
luxuries.
5. Taxes on liquors, cigarettes, forestry products and mining were increased.
6. Dividends were made taxable.
14. • The introduced tax structure was an improvement of the
earlier system introduced by the Americans, but still
remained unequitable.
• As World War II reached the Philippine shores, economic
activity put to stop and the Philippines bowed to a new
administrators, the Japanese. The expenditure of the
Japanese military government grew greatly, and they
issued military notes in order to cover the costs of war.
16. • Roxas Regime (1946-1948)
• He rejected the advised of the United States in tax
collection.
17. • Quirino Regime (1948-1953) -The impetus for
economic growth came through the implementation of
import and exchange controls that led to import
substitution development. -tax revenue in 1953
increased twofold compared to 1948.
18. • Magsaysay, Garcia & Macapagal Regime (1953-1965)
• -Promised to study the tax structure and policy of the
country (through the creation of a Tax Commission in
1959 means of Republic Act No. 2211)
• -The period of post-war republic also saw a rise in
corruption
• -Indirect taxation still contributed to three quarters of tax
revenues and the Omnibus Tax Law of 1969 did not
increase the ratio of income tax to general tax.
19. • Marcos Regime (1965-1986)
• -During the Latter part of Marcos’ years (1981-1985), the
tax system was still heavily dependent on indirect taxes,
which made up 70% of total tax collection.
• -Taxes grew at an average annual rate of 15% and
generated a low tax yield.
20. • Aquino Regime (1986-1992)
• -A major reform in the tax system introduced under the
term Aquino was the introduction of the Value Added Tax
(VAT). -She reformed the tax system through the 1986
Tax Reform Program.
• -The VAT law was signed in 1986 and put to effect in
1988.
• -The tax reform of Aquino administration, both tax and
revenue effort rose, increasing from 10.7% to 15.4% in
1992.
21. • Ramos Regime (1992-1998) - The Ramos administration
ventured into its own tax reform program in 1997 through the
Comprehensive Tax Reform Program, which was
implemented to (1) make the tax system broad-based, simple,
and with reasonable tax rates; (2) minimize tax avoidance
allowed by existing flaws and loopholes in the system: (3)
encourage payments by increasing tax exemptions levels,
lowering the highest tax rates, simplifying procedure; and (4)
rationalize the grant of tax incentives, which was estimated to
be worth 531.7 billion pesos in 1994 - The VAT base was also
broadened in 1997 to include services, through Republic Act
7716
22. • Estrada Regime (1998-2000) - The succeeding term of
President Joseph Estrada in 1998 was too short to
constitute in any change in the tax system. Arroyo
Regime (2000-2010) -She undertook increased
government spending without adjusting tax collections. -
In 2005, the Expanded Value-Added Tax (E-VAT) was
signed into law as Republic Act 9337. -In February 2006,
the VAT tax rate was also increased from 10% to 12%.
23. • Aquino Regime (2010-2016) -The Administration
ventured into the adjustment of excise tax on liquor and
cigarette or the Sin Tax Reform made law by Republic
Act 1035. -It allows the increase the budget of the DOH
and PhilHealth (from 55.2 million in 2012 to 515.4 million
in 2015).
24. • Duterte Regime (2016-Present) -Supported the
implementation of the Tax Reform for Acceleration and
Inclusion (TRAIN) law. -Vowed to lower income tax rates
shouldered by working Filipinos. -The proposed tax
reform also seeks to limit VAT exceptions and increase
excise tax on petroleum products and automobiles.
