This document provides an overview of taxation including: - Defining taxation as a means for governments to finance expenditures by imposing charges on citizens and corporations. - Explaining the different types of taxes like direct, indirect, and public goods taxes. - Tracing the history of taxation from biblical times to the development of modern taxation systems in Europe, Asia, and the Philippines. - Detailing the Philippine tax system including classifications of taxes, forms of taxes on persons and property, and the Sin Tax Law.

2. Introduction to Taxation
By: Sir Thirdy

3. Defining Taxation
• A means by which governments
finance their expenditure by imposing
charges on citizens and corporate
entities.
• Source:
http://www.businessdictionary.com/de
finition/taxation.html

4. What then is Tax?
• A fee charged ("levied") by a government on a
product, income, or activity. If tax is levied directly on
personal or corporate income, then it is a direct tax. If
tax is levied on the price of a good or service, then it is
called an indirect tax. The purpose of taxation is to
finance government expenditure. One of the most
important uses of taxes is to finance public goods and
services, such as street lighting and street cleaning.
Since public goods and services do not allow a non-
payer to be excluded, or allow exclusion by a
consumer, there cannot be a market in the good or
service, and so they need to be provided by the
government or a quasi-government agency, which
tend to finance themselves largely through taxes.

5. History of
Taxation

6. • Biblical Times:
During the time of Jesus Christ,
the Publicans (Also known as
Tax collectors) collects taxes for
the maintenance of the Temple
in Jerusalem and for the Roman
Empire.

7. Apostle Matthew • We first meet Matthew in
Capernaum, in his tax booth on the
main highway. He was collecting
duties on imported goods brought by
farmers, merchants, and caravans.
Under the Roman Empire's system,
Matthew would have paid all the
taxes in advance, then collected
from the citizens and travelers to
reimburse himself.
• Tax collectors were notoriously
corrupt because they extorted far
and above what was owed, to
ensure their personal profit. Because
their decisions were enforced by
Roman soldiers, no one dared
object.
• Matthew was a
dishonest tax
collector driven by
greed, until Jesus
Christ chose him as
a disciple.

8. • European:
More modern systems of taxation followed the expansion
of imperial Europe, together with towns and cities, where
tribute in kind was less useful – cash was the currency
here. The monarchies of Spain and Portugal, however,
still transposed feudal structures, and an obsession with
gold – which was portable – to their occupation of Latin
America. Others followed the example of the city states
of Italy, particularly Venice, which had grown rich on
trade with the East; taxes on trade were relatively easy
to raise. France, the Netherlands and Britain in particular
began to establish commercial outposts, and then
military control, across Africa and Asia. Traditions of
tribute through human bondage revived, however, with
the triangular slave trade between Africa, Europe and the
Americas. In Britain, a disagreement on the rights of
taxation between Parliament and King Charles I in 1629
led to civil war.

9. • Philippines:
The Tributo (Tribute) is a tax system which is the
main source of funds or money of the Spanish
colonial period in the Philippines. It was implemented
system based on Recopilacion de leyes de los
Reynos de las Indias - that the King of Spain issued
a huge amount for his expedition to the Philippines
and in return, must pay this tribute by Filipino. All
citizens are obliged to pay an amount of money to
the government to be considered legitimate subjects
of the King of Spain, except for the Gobernadorcillo,
Cabeza de Barangay (And their delegates), including
the armed men, the sick and disabled, without
sufficient harvest in years and people aged sixty or
older. There are two types of tribute - paying cash,
and paying crops, goods or crops.

10. • Also become a way of tribute to the Spanish
government to count the country's population.
When the Spaniards reached Manila, based
on the proceeds of their tribute,
approximately six thousand population of the
city - 40 are Chinese, 20 Japanese and two
Christians. But questionable because the
recordings done in all paid tribute (such as
Cabeza and above) and those living in the
pueblo only made it to number. Should one
refuse to pay tribute, he considered bandits
and enemies of the colony.
• In 1884, the Cedula Personal replaced the
tribute system.

11. Cedula Personal

12. The Cry of Pugadlawin’s Tearing of
Cedula

13. Principles and Theories of Taxation
• The Benefit Principle. This principle holds the individuals should be
taxed in proportion to the benefits they receive from the
governments and that taxes should be paid by those people who
receive the direct benefit of the government programs and projects
out of the taxes paid.
• The Ability-to-Pay Principle. This principle holds that taxes should
relate with the people’s income or the ability to pay, that is, people
with greater income or wealth and can afford to pay more taxes
should be taxed at a higher rate than people with less wealth. Ex.
Individual income tax.
• The Equal-Distribution Principle. This principle that income,
wealth, and transaction should be taxed at a fixed percentage; that
is, people who earn more and buy more should pay more taxes, but
will not pay a higher rate of taxes.

14. The purpose of Taxation
We Filipinos often disregard the value of tax. We always complain
whenever we compute how much tax are deducted in our salaries. So
to make you feel better I will give you a small list of Importance of
Taxation which I read in our Economics book.
Through tax, citizens can contribute and give their fair-share to the cost
and expenses of government in order for the state to:
• Raise revenue
• No government can exist without it, it cannot promote the welfare of
the people.
• Protect locally produced goods against competition from import by
imposing higher custom duties.
• Protect new industries by granting tax exemptions.
• Regulate property.
• Distribute equally the wealth of the nation.

15. What’s wrong with this picture?

16. The Philippine Tax System
• Tax law in the Philippines covers
national and local taxes. National taxes
refer to national internal revenue taxes
imposed and collected by the national
government through the Bureau of
Internal Revenue (BIR) and local taxes
refer to those imposed and collected by
the local government. The 1987
Philippine Constitution sets limitations
on the exercise of the power to tax. The
rule of taxation shall be uniform and
equitable. The Congress shall evolve a
progressive system of taxation. (Article
VI, Section 28, Paragraph 1). The
Philippine Tax System

17. Classifications and Restrictions of
Taxes
A. Personal, capitation or poll taxes These are taxes
of fixed amount upon residents or persons of a
certain class without regard to their property or
business.
B. Property taxes
1. Real Property Tax - an annual tax that may be
imposed by a province or city or a municipality on
real property such as land, building, machinery
and other improvements affixed or attached to
real property. The Forms of Taxes Imposed on
Persons and Property.

18. 2. Estate Tax (Inheritance Tax) - a tax on the
right of transmitting property at the time of
death and on the privilege that a person
is given in controlling to a certain extent
the disposition of his property to take
effect upon death.
3. Gift or Donor’s Tax - a tax on the privilege
of transmitting one’s property or property
rights to another or others without
adequate and full valuable consideration.
The Forms of Taxes Imposed on Persons
and Property

19. 4. Capital Gains Tax - tax imposed on the sale or
exchange of property . Those imposed are
presumed to have been realized by the seller for
the sale, exchange or other disposition of real
property located in the Philippines, classified as
capital assets.
C. Income Taxes - Taxes imposed on the income of
the taxpayers from whatever sources it is
derived. Tax on all yearly profits arising form
property, possessions, trades or offices. The
Forms of Taxes Imposed on Persons and
Property

20. D. Excise or License Taxes - Taxes imposed on
the privilege, occupation or business not
falling within the classification of poll taxes
or property taxes. These are imposed on
alcohol products; on tobacco products ; on
petroleum products like lubricating oils,
grease, processed gas etc; on mineral
products such as coal and coke and quarry
resources; on miscellaneous articles such
as automobiles. The Forms of Taxes
Imposed on Persons and Property.

21. The SIN tax law
• Republic Act 10351, or the Sin Tax Reform Law, is
one of the landmark legislations under the Aquino
Administration. It is primarily a health measure
with revenue implications, but more fundamentally,
it is a good governance measure. The Sin Tax Law
helps finance the Universal Health Care program
of the government, simplified the current excise
tax system on alcohol and tobacco products and
fixed long standing structural weaknesses, and
addresses public health issues relating to alcohol
and tobacco consumption.

22. Tax Evasion
• Tax evasion is the illegal
evasion of taxes by
individuals, corporations,
and trusts. Tax evasion
often entails taxpayers
deliberately misrepresenting
the true state of their affairs
to the tax authorities to
reduce their tax liability and
includes dishonest tax
reporting, such as declaring
less income, profits or gains
than the amounts actually
earned, or overstating
deductions.

23. Penalty/Punishment on Tax
Evasion in the Philippines
• Imprisonment
Individual: 6-10 years
Corporate: 8-10 years
• Fine
Individual: PhP 10,000.00 - PhP 20,000.00
Corporate: PhP 25,000.00 - PhP 50,000.00

24. ASSIGNMENT!!!
• Different Kinds of Taxes (in the Philippines!).
Short description only!
• Format: Typewritten
• Pages: Minimum: 1 Maximum: 2
• Font Size: 12.
• Recommended source (aside from BORING
WIKIPEDIA). BIR’s (Bureau of Internal
Revenue) Website. http://www.bir.gov.ph
• Seriously NOOOOOOOOOO WIKIPEDIA
PLEASE!