3. Taxation
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• Is the practice of collecting taxes
(money) from citizens based on their
earnings and property
• A charge or fee that a government
imposes on a citizen or business is
called a tax.
8. 8
• The main goal of taxation is to raise revenue for
the government. Among the primary uses of
these taxes are developing infrastructure,
providing services to citizens, and developing
human capital.
• Another goal of taxation is the redistribution of
wealth. Governments reduce the inequality gap
by redistributing wealth from the rich to the
other citizens.
10. 10
Taxes are the primary source of revenue
for the Philippine government. Taxes are
spent on infrastructure projects, public
services, welfare programs, services, and
as budget of different departments of
government. As citizens, we have to pay
our taxes to help our nation and its
development.
13. 13
• National taxes refer to national internal
revenue taxes imposed and collected by the
national government through the Bureau of
Internal Revenue (BIR).
• Local taxes refer to those imposed and
collected by the local government.
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◈ Estate Tax Percentage
◈ Tax Income Tax
◈ Documentary Stamp Tax
◈ Capital Gains Tax
◈ Withholding Tax
◈ Excise Tax
◈ Value Added Tax (VAT)
◈ Donor’s Tax
Taxes
Under
Philippine
National
Taxes
15. Taxes
Under
Philippi
ne Local
Taxes
◈ Basic Real Property Tax
◈ Business Of Printing And Publication Tax
◈ Sand, Gravel, And Other Quarry Resources Tax
◈ Franchise Tax
◈ Professional Tax
◈ Barangay Clearance
◈ Amusement Tax
◈ Barangay Tax
◈ Community Tax
◈ Annual Fixed Tax For Delivery Trucks And Vans
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16. 16
Train Law
• RA 10963 or the Tax Reform for Acceleration
and Inclusion provides an Individual taxpayers
with annual taxable income amounting to
PhP250,000.00 or below are still exempt from
paying income tax.
• The TRAIN aims to make the Philippine Tax
System simpler, fairer, and more efficient to
promote investments, create jobs and reduce
poverty.
18. 18
Pre-Colonial
Era
(900-1521)
Back in the pre-colonial
period, Ancient Filipinos
were already practicing
paying taxes.
Government were called “Barangays”.
The purpose of paying taxes
was for the protection from
their “datu”.
19. 19
Pre-Colonial
Era
(900-1521)
The collected tax was called
“buwis” or “handug”.
There was no “datu” strong enough to
unite the archipelago into one nation.
Some barangays however united to form a
confederation. It was headed by a ruler
called “datu” or raja”
21. 21
Pre-Colonial
Era
(900-1521)
Judicial process was influenced by religion
and by waiting the intervention of the
deities. Wherein Datu served as the chief
judge who was assisted by group of elders
in the barangay that acted as members of
the jury.
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1. “tumao” class (includes datu)
were the nobility of pure royal
descent.
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2. “timawa” class, warrior class or the “the third
rank of nobility” and “free men, neither chiefs
nor slaves”. Required to render military service to
the datu in hunts, land wars or sea raids. They
could acquire property, acquire any job they want,
pick their own wives, and acquire an Alipin. They
were however expected to pay taxes, and support
the Maginoo class. They are the only class to pay
taxes, and hence their importance.
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3. “Uripon class” commoners and
slaves), renders services to the
tumao and timawa for debts or favors.
The Alipin did not likely make any
money for their services, and hence
did not pay taxes.
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Except for Maharlikas, Only the timawa or
free men were required in paying their taxes.
While the uripon or slaves couldn’t offer
anything because they only lived to serve.
Pre-Colonial
Era
(900-1521)
Non Payment taxes was already
punishable during this era.
27. 27
During the 17th and 18th centuries ,
the Contrador de resultas served
as the Chief Royal Accountant
whose functions were similar to
the commissioner of Internal
Revenue.
28. 28
During this times, taxes that
were collected from the
inhabitants vatied from tribute
or head tax of one gold maiz
annually.
29. 29
From 1521 to 1821 the Spanish treasury
had to subsidize the Philippines in the
amount of 250,000 per annum due to the
poor financial condition of the country ,
which can be primarily attributed to the
poor revenue collective system.
30. 30
Other form of taxes from the
Spanish era is the tributo
( polo y servicio, encomienda
system)
Diezmos prediales is 1/10 of the
produce of the encomienda to be paid
to the viceregal government .
31. 31
Vinta is the tax paid
by people in the
provinces along the
Coast of Western
Luzon to defend the
area against muslim
pirates common at
the time.
33. 33
Sample of a Filipinos tax during the Spanish
Occupation
• Tributo (encomienda tax)
10 reales
• Diezmos prediales government tax
1 real
• Commission on internal Revenue
1 real
• Sanctorum
3 reales
35. 35
1898-1903:
• American followed the Spanish system of
taxation.
• The Urban which is a tax on the annual rental
value of an urban real state was replaced
known as land tax that charge both urban and
rural real state.
• Civil Government of the Philippines:
• William H. Taft (1902)
• Luke E. Wright (1904)
American
Period
(1898-1935)
36. 36
July 2, 1904:
• Bureau of Internal Revenue (BIR) was
created through the passage of
Reorganization Act No. 1189
• The bureau is mandated by law to
assess and collect all national internal
revenue taxes, fees and charges.
American
Period
(1898-1935)
37. 37
1904: The internal Revenue Law of 1904
• Licensed and exercise taxes on banks,
doc.
• Stamp taxes, cedula, taxes on insurance
company, forests products, mining
concessions, taxes on
business,.occupational licenses
American
Period
(1898-1935)
38. 38
1907:
Changes in cedula and industrial tax
October 3, 1913: Underwood-Simmons
Tarrif Act
- US Pres. Woodrow Wilson
- Governor General Francis Burton
Harrison
American
Period
(1898-1935)
39. 39
August 1, 1904: The BIR was formally
organized and made operational.
New sources of tax were introduced:
• Income Tax(1914)
• Inheritance Tax (1919)
• National Lottery
American
Period
(1898-1935)
41. 41
New measures and legislation were
introduced to make the taxation
system appear more equitable.
Income tax were increased in 1936,
adding surtax rate on individual net
incomes in excess of 10,000 pesos.
Income tax of corporation were also
increased.
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In 1939, Commonwealth government
drafted the National Internal Revenue
Code, introducing major changes of the
new tax system as follows:
In 1937, the cedula tax was abolished and
residence tax was imposed on every citizen
aged 18 years old and on every
corporation.
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1. Normal tax of 3% and the surtax on income was
replaced by a single tax at a progressive rate.
2. Personal exemption were reduced.
3. Corporation tax was slightly increased by introducing
taxes on inherited estates or gifts. Donated in the name of
a dead person.
4. The cumulative 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.
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Introduced tax was an improvement of the
earlier system taxation imposed during
Americans. But still remained inequitable
The lower class still felt the bulk of the
burden of the taxation while the upper
class were able to maneuver the
situation that will give benefit them
more.
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The agriculture sector was still taxed low
to promote growth, but there was no
incentive for industrial investment to take
root and develop.
As the World War II reached the Philippine
shore, any economic activity was put to stop
and Philippines bound to a new set of
administrators, the Japanese.
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Japanese administration continue the
taxation system introduced during
Commonwealth but exempted the articles
belonging to the Japanese armed forces.
Main sources of taxation came from
amusements, manufactures, professions
and business licenses fell as well as
foreign trade.
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Tax collection was a difficult task during war.
The expenditure of the Japanese military
government grew greatly, and they
issued military notes in order to cover the
costs of the war.
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• The means by which a government adjusts its
spending levels and tax rates to monitor and
influence a nation’s economy.
• In the Philippines, fiscal policy has played a
crucial role in shaping the country’s economic
development since its independence in 1946.
FISCAL POLICY
49. 49
1. Expansionary FP (designed to boost
the economy)
2. Contractionary FP (when the
government either cuts spending or
raises taxes )
2 Types of Fiscal Policy
50. 50
PRESIDENT MANUEL ROXAS
ADMINISTRATION
• When Manuel Roxas started his term as the first
president of the Third Republic of the Philippines, the
country was paralyzed because WWII just ended. The
reconstruction of the post-war Philippines fell into the
hands Manuel Roxas. Philippines were severely
struggling with low production, decreasing job
availability/increasing unemployment rates, weak
education system and interference in the government
sector by the American government.
51. 51
PRESIDENT ELPIDIO QUIRINO
• The momentum of economic growth came
during his time through the implementation of
import and exchange controls that led to
import substitution development.
• Import and exchange controls – method of
state intervention in the imports and export of
the country, so that the adverse balance of
payments may be corrected.
52. 52
• Imports Substitution Development – a
trade and economic policy which
advocates replacing foreign imports with
domestic production.
• Corporate Tax Rate – a tax imposed on
the net income of the company
53. 53
PRESIDENT MAGSAYSAY, GARCIA, AND MACAPAGAL
• The fiscal policies of the Magsaysay, Garcia, and
Macapagal administrations aimed to study the tax
structure and policy of the country (through the creation
of a Tax Commission in 1959 by means of Republic Act
No. 2211).
• The period of the post-war republic also saw a rise in
corruption.
• Indirect Taxation – a tax collected by an intermediary
from the person who bears the ultimate economic
burden of the tax.
54. 54
• Tax revenue – define as the revenues collected
from taxes on income and profits, social security
combinations, taxes levied in goods and
services, payroll taxes, taxes on the ownership
and transfer of property, and other taxes.
• collection of taxes remained poor; tax structure
was still problematic, and much of public funds
were lost to corruption, which left the
government incapable of funding projects
geared toward development.
55. 55
PRESIDENT FERDINAND MARCOS
• The tax system was still heavily dependent on
indirect taxes which made up of 70% of total tax
collection.
• Tax system remained unresponsive
• Taxes grew at an average annual rate of 15%
and generate low tax yield.
• Tax effort – the ratio between the share of the
actual tax in gross domestic product and
predictable taxable capacity was at a low 10.7%
56. 56
PRESIDENT CORAZON AQUINO
• Reformed the tax system through the 1986
Tax Reform Program.
• 1986 Tax Reform Program- its aimed was
to “simplify the tax system, make revenues
more responsive to economic activity,
promote horizontal equity and promote
growth by correcting existing taxes.”
57. 57
• Along with tax reform came the administrative
reforms such as the restructuring the Dept. of
Finance and the BIR through the executive
Order 127, collection and tax audits were
intensified, computerization was introduced;
and corruption was relatively reduced.
• Both tax and revenue effort rose, increasing
from 10.7% in 1985 to 15.4% in 1992 .
58. 58
PRESIDENT FIDEL RAMOS
• This administration ventured into its own tax reform
program in 1997 through the Comprehensive Tax Reform
Program.
• Comprehensive Tax Reform – implemented to make the
tax system broad-based, simple, and with simple and
reasonable tax rates, minimize tax avoidance allowed by
existing loopholes in the system, encourage payments by
increasing tax exemptions levels, lowering the higher tax
rates, and simplifying procedure and rationalize the grant
of tax incentives.
60. 60
PRESIDENT GLORIA ARROYO
• She undertook increased government spending
without adjusting tax collections. This resulted
in large deficits from 2002 – 2004.
• Expanded Value- Added Tas (E-VAT) – signed
into law as Republic Act 9337; expanded tge
VAT base; taxed selected professional services
and VAT tax rate was also increased from 10%
to 12%.
61. 61
PRESIDENT BENIGNO AQUINO III
• The administration ventured into the adjustments of
excise tax on liquor and cigarettes or the Sin Tax
Reform.
• Sin Tax Reform- it is primarily a health measure with
revenue implications, but more fundamentally, it is a
good governance measure. It helps finance the
Universal Health Care Program of the government,
simplified to the current excise tax system on alcohol
and tobacco product.
62. 62
PRESIDENT RODRIGO ROA DUTERTE
• Promised tax reform, particularly taxes as it
vowed to lower income tax rates shouldered
by working Filipinos.
• The proposed tax reform seeks to limit VAT
exemptions and increase excise taxes on
petroleum products and automobiles.
63. 63
• During his administration the present
income tax scheme of the country is
the second highest in the Southeast
Asia and the current laws on income
taxes were outdated as they were
drafted two decades ago.
