Taxation

It is the process by which the sovereign,

through its lawmaking body, raises revenues
used to defray expenses of government
It is a means of the government in increasing
its revenue under the authority of the law,
purposely used to promote welfare and
protection of its citizenry.

Taxation refers to the percentage of

income, property of value, sales price etc.
for the support of the government.
Tax imposed contribution from person and
properties levied by the lawmaking body

Taxation inherent power of the state to

impose and demand contribution upon
person, properties or rights for the purpose
of generating revenues
The power of taxation rest upon necessity

The power is legislative in nature

Essential for the existence of independent
government
Based on the theory no government can exist or
stand without taxation

The benefit theory

Basis

of taxation is found in the reciprocal duties

of protection and support between the state and
its inhabitants.
In return, the taxpayer receives benefit and
protection from the state
Privilege enjoyed by all

The ability pay principle

This

principle holds that taxes should relate with the

peoples income or the ability to pay
Greater income or wealth can afford to pay and should
have higher taxes than people with less wealth

The Equal Distribution Principle

Income,

wealth and transaction should be taxed

at a fixed percentage
People who earn more and buy more should pay
more taxes, but will not pay a higher rate of
taxes

It is inherent in sovereignty
Essential

for the existence of the government

It is a legislative in character
Cannot

be exercised by the executive or judicial

branch
Under constitution only congress can impose
taxes
Granted to the local government subject to such
guidelines and limitation provided by law

It is subject to constitutional and inherent

limitation
Power

of taxation is subject to certain

limitations

A tax is proportional
Government

takes an amount of money from a

person which is proportional to his/her income.

A tax is regressive
Government

takes a larger percentage of a

persons income for tax while receiving a lower
income

A tax is progressive
Government

takes larger percentage of his salary

for tax due to his high salary

To equitably contribute to the wealth of the

nation
To protect new industries
To protect local producers

It is enforced contribution
It is generally payable in cash
It is proportionate in character
It is levied on person or property
It is levied by the State which has
jurisdiction over the person or property
It is levied by the lawmaking body of the
state
It is levied for public purposes

Fiscal Adequacy
It

means that the sources of revenue taken as a whole

should be sufficient to meet the expanding expenditures
of the government regardless of business conditions,
export taxes, trade balances, and problems of economic
adjustment.

Equality or Theoretical Justice

It

means that taxes levied must be based upon the

ability of the citizen to pay.

Administrative Feasibility
This

principle connotes that in a successful tax system

taxes:

tax should be clear and plain to taxpayers,

capable of enforcement by an adequate and well trained staff
of public office
Convenient as to the time and manner of payment
Not unduly burdensome upon or discouraging to business
activity

Consistency or Compatibility with Economic Goals

This

refers to the max laws that should be consistent

with economic goals or programs of the government

As to subject matter:
Personal, Poll, or Capitation Tax

1.

This tax has a fixed amount upon all persons residing

within a specified territory without regard to their
property or the occupation in which they may be
engaged.
Ex. Residence Tax

2. Property

Tax

Refers to one assessed on all property located within a

certain territory on a specified date in proportion to its
value or in accordance with some other reasonable
methods of apportionment
Ex. Real Estate Tax

Excise Tax
Refers

to any tax which does not fall within the

classification of poll tax or a property tax and embraces
every form of burden not laid directly upon person or
property

Ex. VAT
INTRODUCES IN THE Phil on Jan. 1, 1988
Adopted by developing nations of the world, as an effective
method of raising revenues with a minimum collection cost.

As to who bears the burden

Direct

Tax

Refers to a tax which is demanded from an individual who

tends to buy or purchase a good or service
Ex. Income Tax

Indirect

Tax

Refers to a tax paid primarily by a person who can shift the

burden upon some else, or who is under no legal obligation to
pay him/her
Ex. Buying of goods and services (VAT)

As to determination of account
Specific

Tax is fixed or determinate sum imposed by the head or

number or some standard of weight or measurement and
requires no assessment beyond a listing and classification of
the object to be taxed.
Ex. Taxes on wines

Ad

Tax

Valorem Tax

Tax of fixed proportion of the value of the property with

respect to which the tax is assessed and requires the
intervention of assessors or appraisers to estimate the value of
such property before the amount due from each taxpayer can
be determined

As to purpose
General

A tax levied to an individual for a general purpose

Special

Tax

Tax

A tax levied to an individual for a particular or specific purpose

As to scope
National

Imposed by the state itself and is effective within the entire

jurisdiction

Local

Tax

Tax

Imposed by a political subdivision of the state and is effective

only within the territorial boundaries

Tax vs. Toll

A

tax is demanded of sovereignty while toll is a

demand for proprietorship
Tax is paid for the use of government property
while toll paid for the use of anothers property
Tax is imposed by Government only while toll can
be imposed by government, private individual or
entity

Tax vs. Penalty

Tax

is use to raise revenue; Penalty designed to

regulate conduct
Tax is imposed by the government only; penalty
maybe imposed by government or a private
individual

Tax vs. Debt

Tax

is based on Law; Debt based on contract

Tax may be assignable; Debt is assignable
Tax payable in cash; Debt payable in cash or kind
Person maybe imprisoned for a nonpayment of
taxes; person may not be imprisoned for
nonpayment of debt

Constitutional
Inherent

Tax vs. other terms

Revenue

All funds or income derived by the government

whether from tax or any other source in another sense

Internal

Refers to taxes imposed by the legislature other than

duties on imports and exports

Custom

Revenue

Duties

Taxes imposed on goods exported into a country

Religious Institution (church, mosque)

Charitable Institution
Nonprofit, nonstock eductaional institution
Nonprofit cemeteries
Government Institution
Foreign Diplomat

Situs latin word

Place

of taxation
ex. Real property

Mobilia sequntar personan

Movables

follow the law person

Direct Duplicate
Indirect Duplicate
Elements

of Direct Duplicate

Taxing twice
Same taxing authority
Within the same taxing jurisdiction
For the same purpose
In the same taxable period
Involving same purpose

 Indirect
Occurs

Duplicate

when taxes on the property are not

imposed by the same taxing authority
Ex. Local & national government impose taxes on
the same property during one taxable period

Shifting
One

way of passing the burden of tax from one

person to another
Kinds:

FORWARD SHIFTING
BACKWARD SHIFTING
ONWARD SHIFTING

Capitalization
Reduction

in the price of taxed object to the

capitalized value of future tax

Transformation
Manufacturer

or producer upon whom that tax

has been imposed pays the tax

Tax Evasion
Tax Avoidance
Tax Exemption

National
National

Internal revenue tax

Tariffs and customs code of the Phil
Narcotics tax
Sugar adjustment act
Travel Tax
Private motor vehicle act

Local Taxes
Local

code tax
Real property tax code
Tax ordinance