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Taxation Defined
Taxation is a mode of raising revenue for public
purpose. The term is ordinarily used to express the
exercise of the sovereign power to raise a revenue for
the expense of the government. It is the act of laying
a tax, i.e. the process or means by which the taxing
power is exercised. (1 Cooley on Taxation. 72-73)
Constitutional Limitations
These are limitations imposed by the Constitution. They are:
(a) No person shall be deprived of life, liberty or property without due
process of law, nor shall any person be denied the equal protection of the
laws (Art.III, Sec. 1)
(b) No person shall be imprisoned for debt or nonpayment of a poll tax
(Art.III, Sec. 20)
(c) The rule of taxation shall be uniform and equitable, The congress shall
evolve a progressive system of taxation (Art. VI, Sec.28(1)).
(d) Charitable institutions, churches and parsonages or convents appurtenant
thereto, mosques, non-profit cemeteries, and all lands, buildings, and
improvements, actually, directly and exclusively used for religious,
charitable, or educational purposes shall be exempt from taxation.
(e) No law granting any tax exemption shall be passed without the
concurrence of a majority of all the members of the Congress. (Act VI,
Sec.28(4)).
(f) No law impairing the obligation of contracts shall be passed (Art.III, Sec.
10).
Contractual Limitations
These are restrictions on the taxing power imposed by
previously existing contracts entered into by the
government with another party who may be another
state or its own citizens.
When it is unilaterally granted by law, and the same it
withdrawn by virtue of another law
When the exemption is granted under a franchise it
may be withdrawn at any time
Inherent Limitations
These are restrictions arising from the very nature of the power to tax itself.
They are:
(a)Public purpose of taxes
(b)Non-delagability of the taxing power
(c)Territoriability or Situs of taxation
(d)Tax exemption of the government
(e)International comity
TESTS IN DETERMINING PUBLIC PURPOSE the ends are public benefit and
welfare
1.Duty Test-whether the thing to be furthered by the appropriation of public
revenue is something which is the duty of the State, as a government, to
provide.
2.Promotion of General Welfare Test-whether the proceeds of the tax will
directly or indirectly promote the welfare of the community in equal
measure.
Kind of Tax
Personal-Community tax
Real Property Tax
Business Tax
Transfer Tax
Sales Tax
Income Tax
Corporate Tax
Situs
Residence of taxpayer
Location of property
Place of business
Residence or citizenship of
the taxpayer or location
of property
Where the sale is
consummated
Consider (1) citizenship, (2)
residence and (3) source
of income
Law on incorporation
3.
TAXATION
1. Purpose- to raise revenue
2. Amount of Exaction-no limit
3. Benefits Received-no special or direct benefit received
is received by the taxpayer, merely general benefit of
protection
4. Non impairment of contracts- contracts may not be
impaired
5. Transfer of property rights- taxes paid become part of
public funds
6. Scope-all persons, property and excise
Definition:
.... Taxing the same property twice when it
should be taxed but once.
Kinds of Double Taxation:
1. Direct Duplicate Taxation-double taxation in
the objectionable or prohibited sense and
constitutes a violation of substantive due
process.
As to Basis
1. Constitutional-immunities from taxation
which originate from the constitution
2. Statutory-those which emanate from
legislation
As to Form
1. Express-expressly granted by organic or
statute law
2. Implied-when particular persons, property
or excises are deemed exempt as they fall
outside the scope of the taxing provision itself
As to Extent
1. Total-absolute immunity
2. Partial-one where a collection of a part of
the tax is dispensed with
As to Object
1. Personal-granted directly in favor of
certain persons
2. Impersonal-granted directly in favor of a
certain class of property
Tax Defined
Tax is the enforced proportional contribution from
persons and property, levied by the State, by virtue of
its sovereignty, for the support of government and for
all public needs (1 Cooley on Taxation)
A tax has been defined as an enforced, proportional,
pecuniary contribution, from persons and property
within the taxing jurisdiction, levied by the State by
virtue of its sovereign power to tax, to raise
revenue for the support of the government and for its
public needs (Taxation Review, Camillo).
Purpose of tax
Taxed are the lifeblood of the government. Without
taxes, no government can function. Taxes must be levied
in order to defray the various governmental functions
(Taxation review, Camillo.)
Canons of a Tax
1. Proportional to one's ability to pay
2. Certain and not arbitrary
3. Convenient to pay
4. Economical to collect (Taxation Review. Camillo)
Classification of Taxes
Definition:
Sets of rules that provide means for the State
to raise revenues burden upon its citizens.
How to make a tax law?
Generally, all revenue bills (proposal) must
originate from the House of Representatives.
After passing 3 readings by a majority vote in
technical committee and deliberation of
congress. It shall be elevated to Senate, which
needs to pass the same 3 readings before the
President signs a bill into law for its
implementation.
TAX IMPOSITION
One that provides a burden
TAX EXEMPTION
One that provides immunity
ADMINISTRATIVE INTERPRETATIONS
These interpretations are given great
weight but are not laws
JUDICIAL INTERPRETATIONS
These are courts decisions which are
considered part of the law of the land
Assessment Defined
It is the process by which persons subject to taxation
are listed, their property described, and its value
ascertained and stated.
Assessment is merely a notice to the effect that the
amount therein stated is due as tax and a demand for
the payment thereof. It is a step preliminary, but
essential to warrant of distraint and levy, if still
feasible, and also to establish a cause for judicial
action.
Assessment fixes and determines the tax liability of
taxpayer. As soon as it is served, an obligation arises
on the part of the taxpayer concerned to pay the
amount assessed and demanded.
TAX
DEBT
Created by contract
Payable in money
Assignable
No imprisonment in case of non
payment (Art III Sec 20 of
Constitution)
Can be imposed by private
individual
Taxpayers Suit
This suit can only be allowed if the act involves a direct and
illegal disbursement of public funds derived from taxation
Equitable Recoupment
This states that a claim for refund which is prevented by
prescription may be allowed to be used as payment of
unsettled tax liabilities if both taxes arise from the same
transaction in which overpayment is made and
underpayment is due
Tax Amnesty
This is an immunity from all criminal and civil obligations
arising from non payment of taxes. It is a general pardon
given to all taxpayers; it applies only to past periods.
Other Powers
1. Duty to ensure the provision and distribution of forms,
receipts, certificates, and the acknowledgement of
payment of taxes
2. Authority to administer oaths and to take testimony
3. Authority to make arrests and seizures
4. Authority to employ, assign or reassign internal revenue
officers involved in excise tax functions to establishments
where articles subject to excise tax are produced or kept
5. Authority to assign or reassign internal revenue officers
and employees of the BIR to other or special duties
connected with the enforcement or administration of the
revenue laws
CAPITAL
Capital is a fund
Capital is wealth
Capital is a tree
INCOME
Income is a flow
Income is the service
(fruit) of wealth
Income is the fruit