Professional Documents
Culture Documents
of Taxation
Tax 111 Income Taxation
Ferdinand C. Importado
CPA, MBA
Objectives
At the end of this lecture, the students shall
be able to:
Define taxation.
Discuss the purposes of taxation.
Identify the theory and basis of taxation.
Describe the principles of a sound tax
system.
List the nature of taxation.
Objectives
At the end of this lecture, the students shall
be able to:
Explain the limitations of taxation
(constitutional and inherent).
Identify the aspects of taxation.
What is taxation?
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.
Purpose of taxation
Secondary purposes
To strengthen anemic enterprises by
giving tax exemptions.
To protect local industries against
foreign competition through imposition of
high customs duties on imported
goods.
Purpose of taxation
Secondary purposes
To reduce inequalities in wealth and
income by imposing progressively
higher taxes.
To prevent inflation by increasing taxes
or ward off depression by decreasing
taxes.
Fiscal adequacy
Equality or theoretical justice
Administrative feasibility
Fiscal adequacy
The source of government revenue should
be efficient to demand the needs of public
expenditure.
Creating new taxes or new tax machinery
or by merely changing the rates applicable
to existing taxes.
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
Nature of taxation
It is inherent in sovereignty.
Legislative in character.
Subject to constitutional and inherent
limitations.
Limitations 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.
Constitutional limitations
Due process.
Equal protection of the laws.
Rule of uniformity and equity in taxation.
Non-imprisonment for non-payment of poll
tax.
Non-impairment of the obligations and
contracts.
Non-infringement of religious freedom.
Constitutional limitations
No appropriation for religious purposes.
Exemption of religious, charitable or
educational entities, non-profit cemeteries,
and churches from taxation.
Exemption of revenues and assets of nonstock, non-profit educational institutions
and donations for educational purposes
from taxation.
Constitutional limitations
Concurrence by a majority of all members
of the Congress for the passage of a law
granting any tax exemption.
Power of the President to veto any
particular item or items in a revenue or
tariff bill.
Non-impairment of the jurisdiction of the
Supreme Court in tax cases.
Inherent limitations
Requirement that levy must be for a public
purpose.
Non-delegation of the legislative power to
tax, except:
Delegation to the President
Delegation to local governments
Delegation to administrative bodies
Inherent limitations
Aspects of taxation
Levy deals with the provisions of law
which determines:
The person or property to be taxed
The sum or sums to be raised
The rate of the tax
The time and manner of levying, receiving
and collection the tax.
Aspects of taxation