2. What is taxation?
A tax is money which must be paid to the
government for participating in some kind of economic
Activity.
The money which is generated from tax is then used
by the government to provide public such as healthcare,
education, transportation, and security.
There are many different types of tax such as
income tax, sales tax, property tax, business tax and
environment tax.
3. Key terms:
Direct Tax – a tax which is paid by the person or
organization directly to the government (ex.
Income tax, corporate tax)
Indirect Tax – a tax which is paid by the person
or organization, but the cost is ultimately by
another ( ex. VAT, import tax)
4. Key terms:
Public spending – spending by the government
throughout the economy on public services ( ex.
Education, police, healthcare)
5. Purpose of taxation
Primary purpose
• To provide funds or property with which to
promote the general welfare of its citizens and
to enable it to finance its multifarious
activities.
6. Purpose of taxation
Secondary purpose
• To strengthen anemic enterprises by giving tax
exemptions.
• To protect local industries against foreign
competition through imposition of high customs
duties on imported goods.
7. Purpose of taxation
Secondary purpose
• To strengthen anemic enterprises by giving tax
exemptions.
• To protect local industries against foreign
competition through imposition of high customs
duties on imported goods.
8. Theory and basis of taxation
Theory
• The existence of the government is a necessity.
• The government cannot continue without a
means to pay its expenses.
• The government has the rights to compel its
citizens and property within its limits to
contribute.
9. Theory and basis of taxation
Basis
• Taxation is based on the reciprocal duties of
protection and support between the
government and its people.
• Government receives taxes from the people
which is used to perform functions of
government and other benefits.
• Benefit-received theory.
10. Basic principles of sound tax system
• Fiscal adequacy
• Equality or theoretical justice
• Administrative feasibility.
11. Fiscal adequacy
• The source of government revenue should
be efficient to demand the needs public
expenditure.
• Creating new taxes or new tax machinery
or by merely changing the rates applicable
to existing taxes.
12. Equality or theoretical justice
• The tax burden should be proportionate to
the taxpayer’s ability to pay.
• Ability –to-pay principle
13. Administrative feasibility
• The tax laws should be capable of convenient, just
and effective administration.
• Each tax should be:
-Clear and plain to the taxpayer.
-Capable of uniform enforcement
- Convenient as to time, place and manner of
payment.
-Not unduly burdensome upon or discouraging to
business activity.
14. Nature of Taxation
• It is inherent in sovereignty.
• Legislative in character.
• Subject to constitutional and
inherent limitations.
15. Limitation of Taxation
• Inherent limitations- restrictions on the
power exists from the very nature of the
power of taxation itself.
• Constitutional Limitations-restrictions in
the exercise of the power of taxation as
expressly provided in the Philippine
Constitution.
16. Constitutional Limitations
• Due process.
• Equal protection of the laws.
• Rule of uniformity and equity in taxation.
• Non-imprisonment for no-payment of poll tax.
• Non-impairment of the obligation and
contracts.
• Non-infringement of religious freedom.
17. Aspect of taxation
• Levy- deals with the provisions of law which
determines:
- The persons or property to be taxed
- The sum or sums to be taxed
- The rate of the tax
- The time and manner of levying, receiving
and collection the tax.
18. Aspect of taxation
• Collections- constituted of the provisions
of law which prescribe the manner of
enforcing the obligation on the part of
those taxes to pay the demand thus
created.
