TAXAT I O N I

Based on De Leon book

CHAPTER I GENERAL PRINCIPLES Errors on the part of tax officials

do not bind the government or prejudice its right to collect the taxes legally due from taxpayers
A. CONCEPT, NATURE AND CHARACTERISTICS OF TAXATION
Defn of taxation B. CLASSIFICATION AND DISTINCTIONS
Classification of taxes (6)
Purpose, Scope and Rationale 1. subject matter or object (PPE)
P provide funds or property to promote general welfare and protection of the citizens - personal, poll or capitation
S every imposition, charge or burden persons, property and property rights (P 3) - property
R tax is the lifeblood of the govt; symbiotic relationship of govt and its citizens - excise
Meaning of taxes 2. who bears the burden
Essential Characteristics of Tax (8) ECM L4 -direct
- indirect
- on persons or property 3. determination of amount
- by the state which has juris. over persons and prop -specific
- by the law-making body -ad valorem
- for public purpose 4. purpose (GS)
- general, fiscal or revenue
Theory and basis of taxation (3) PER - special/regulatory
- Public Purpose requirement for lawful taxation 5. scope/authority imposing the tax (NM)
- Existence of government - national
- Reciprocal duties of state and inhabitants - municipal or local
* benefits-received principle 6. graduation/rate (PPR)
Nature and Power of Taxation (3) ILS - proportional/flat/uniform tax
- inherent in sovereignty - progressive or graduated
- legislative in character - regressive (XX)
- subject to constitutional and inherent limitations Regressive/progressive system of taxation
Aspects of Taxation Regressive =/= Regressive tax system
Extent of legislative power to tax (4) SPAM Progressive =/= Progressive tax system
- subjects or objects to be taxed Tax distinguished from toll
- for a public purpose
*limits of judicial review re tax: determination of: TOLL TAX
>validity of tax in relation to the Consti As to demand of proprietorship of sovereignty
>the appropriate application of a tax law Payment for the use of anothers property the support of the government
Limit of the amount Depends on the cost of No limit on the amt of tax that
- amount or rate of tax construction may be imposed
- manner, means and agencies of collection of the tax Who may impose Either govt/private entities Government only
Non-Revenue Objectives of taxation (9)
Basic Principles of a Sound Tax System (3) FAT
- Fiscal Adequacy: source of revenue, taken as a whole should be sufficient to meet Tax distinguished from penalty
the demands of public expenditure
- Theoretical and equality justice PENALTY TAX
*ability-to-pay principle Purpose Regulate conduct Raise revenue
- Administrative feasibility: tax laws should be capable of convenient, just and effective admin. and Who may impose Govt/Private entities Govt only
enforcement at a reasonable cost
 DE LEON (12) CO UNTIAN (10)
Tax distinguished from special assessment Due process law Due process law
Equal protection of laws Equal protection of laws
SPECIAL ASSESSMENT TAX Uniformity and Equity in taxation Uniformity and Equity in taxation
On which it may be levied on Land only Non-impairment of obligations of contracts Non-impairment of obligations of contracts
Limit of liability Not a personal liability of the
person assessed, only on the XPN: franchise may be revoked since in a XPN: franchise may be revoked since in a
land involved Consti, it is subject to amendment, alteration, Consti, it is subject to amendment,
Based on Wholly benefits necessity or repeal by Congress alteration, or repeal by Congress
Application Exceptional both as to the time General application Non-imprisonment for non-payment of poll
and place tax
Tax distinguished from license or permit fee Non-infringement of religious freedom
No appropriation for religious purposes
LICENSE FEE TAX
Exemption of religious, charitable and Exemption of religious, charitable and
Legal compensation or reward Enforced contribution educational entities, non-profit cemeteries educational entities, non-profit cemeteries
of an officer for a specific and churches ADE for religious, charitable or and churches ADE for religious, charitable or
service educational purposes from property taxation educational purposes from property taxation
Purpose of Imposition Regulation Revenue
Exercise of Sovereign Power Police Power Taxing Power exclusively=primarily rather than solely exclusively=primarily rather than solely
Limit of Amount Limited to necessary expenses Generally no limit on the
of inspection and regulation amount of tax Test of exemption: Test of exemption:
Imposed on Right to exercise a privilege Persons and property It is the use of the property and not ownership Use of the property and not ownership
In case of failure to pay Makes the act or business DOES NOT MAKE ILLEGAL the Exemption of revenues and assets from non- Exemption of revenues and assets from non-
ILLEGAL act or business stock, non-profit educational institutions ADE stock, non-profit educational institutions
from taxation used ADE for educational purposes from
Importance of Distinctions taxation
Tax distinguished from debt
Taxes not generally subject to set-of IPDC income IPDC income
Rationale: Because the govt and the tax payer are not mutual debtors and creditors of each other property property
donors taxes donors taxes
XPN: when the claims of the govt and the taxpayer against each other have already become DDFDUE, custom duties custom duties
DEMANDABLE AND FULLY LIQUIDATED
Concurrence by a majority of all members of Concurrence by a majority of all members of
* CIR may grant refund or credit of taxes erroneously or illegally paid. Congress for the passage of a law granting tax Congress for the passage of a law granting tax
Tax distinguished from other terms exemption exemption
Subsidy Power of the President to veto any particular
Revenue item or items in a revenue or tariff bill
Internal revenue Non-impairment of the jurisdiction of the SC Non-impairment of the jurisdiction of the SC
Custom duties in tax cases in tax cases re legality of any tax, impost,
Tariff assessment or toll or any penalty imposed in
Concept of Power of eminent domain relation
Concept of police power Power of the LGU to create its own sources of
Similarities among taxation, eminent domain and police power revenues subject to limitations the Congress
Distinction among three powers may provide
C. LIMITATIONS ON THE POWER OF TAXATION LGU have a just share in the national taxes
Limitations classified which shall be automatically released to
Enumeration of the limitations them
1. Constitutional
 2. Inherent (5)
- levy must be for public purpose (implied from Consti)
- non-delegation of legislative power to tax (implied from Consti)
- exemption from taxation of government entities
- international comity
- territorial jurisdiction
Requirement of due process law
Requirement of equal protection of the laws
Requirement of uniformity and equity in taxation
*Uniformity requires uniform application and operation, without discrimination, of the tax in every
place whether the subject of it is found

* Equality in taxation such apportionment be more or less just in the light of the taxpayers ability to
pay (ability-to-pay principle)

*Progressive system of taxation tax laws shall place emphasis on direct rather than indirect taxation
with ability to pay as principal criterion

Requirement of Public Purpose

- Public Purpose= governmental purpose

Test of Rightful Taxation: Whether the proceeds of the tax must be used for
1. For the support of the government
2. For any of the recognized objects of government
3. To promote the welfare of the community

*Not exclusively public; ///incidental benefit

*Taxpayers legal standing to question illegal expenditure of public funds