1. Rule of taxation shall be uniform and equitable. Congress shall evolve a progressive system of taxation. 2. Charitable institutions, etc. and all lands, building and improvements actually, directly and exclusively used for religious, charitable or educational purposes shall be exempt from taxation. 3. All revenues and assets of non-stock, non-profit educational institutions used actually, directly and exclusively for educational purposes shall be exempt from taxes and duties. 4. Law granting tax exemption shall be passed only with the concurrence of the majority of all the members of Congress. UNIFORM Uniformity. Uniformity signifies geographical uniformity. A tax is uniform when it operates with the same force and effect in every place where the subject is found. Uniformity in taxation v. Equality in taxation. Uniformity in taxation means that persons or things belonging to the same class shall be taxed at the same rate. It is distinguished from equality in taxation in that the latter requires the tax imposed to be determined on the basis of the value of the property. Tan v. del Rosario: Uniformity means: (1) the standards that are used therefor are substantial and not arbitrary; (2) the categorization is germane to achieve the legislative purpose; (3) the law applies, all things being equal, to both present and future conditions; and (4) the classification applies equally well to all those belonging to the same class. There is a difference between the homeless people and the middle class. The two social classes are differently situated in life. (Tolentino v. Sec. of Finance) EQUITABLE The present constitution adds that the rule of taxation shall also be equitable, which means that the tax burden must be imposed according to the taxpayers capacity to pay. Progressive system of taxation. The Congress shall evolve a progressive system of taxation. Tax system is progressive when the rate increases as the tax base increases. Reason for progressive system. The explicit mention of progressive taxation in the Constitution reflects the wish of the Commission that the legislature should use the power of taxation as an instrument for a more equitable distribution of wealth.
Directive not a judicially enforceable right. The directive to evolve a
progressive system of taxation is addressed to Congress and not a judicially enforceable right. (Tolentino v. Sec. of Finance) Indirect taxes. The Constitution does not prohibit the imposition of indirect taxes, which are regressive. The provision simply means that direct taxes are to be preferred and indirect taxes should be minimized as much as possible. It does not require Congress to avoid entirely indirect taxes. Otherwise, sales taxes, which are the oldest form of indirect taxes, will be prohibited. The mandate to Congress is not to prescribe but to evolve a progressive system of taxation. (Tolentino v. Sec. of Finance)