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PRINCIPLES OF
TAXATION
MIA-M
• DEFINITION OF TAXATION
• UNDERLYING BASIS OF TAXATION
• PURPOSES OF TAXATION
• NATURE OF THE POWER TO TAX
• ASPECTS OF TAXATION
• ATTRIBUTES OF A SOUND TAX SYSTEM
• DEFINITION OF TAXES
• CHARACTERISTICS OF TAXES
• TAXATION VS. OTHER FUNDAMENTAL POWERS
• TAXES VS. OTHER EXACTIONS
• TAX EVASION VS. TAX AVOIDANCE
• DOUBLE TAXATION
OUTLINE OF DISCUSSION
• The power by which the sovereign raises
revenue to defray the expenses of
government.
What is Taxation?
• Taxes are the lifeblood of government and their prompt
and certain availability is an imperious need.
• The existence of government is a necessity; it cannot
exist nor endure without the means to pay its expenses;
and for those means, the government has the right to
compel all its citizens and property within its limits to
contribute in the form of taxes.
UNDERLYING BASIS OF
TAXATION; LIFEBLOOD
THEORY
• No right to set-off / compensation
• The right of the government to tax its subjects exists
without a constitutional grant
• Generally, the courts cannot issue a writ of injunction
against the collection of taxes
• The State is not estopped from collecting taxes by the
mistakes or errors of its agents
Lifeblood Theory;
Manifestations
Lifeblood Theory: The Power to Tax
is the Power to Destroy? Or Not?
• The existence of the government is a necessity and it
cannot continue without the means to support itself.
UNDERLYING BASIS:
NECESSITY THEORY
• Taxes are what we pay for civilized society. Without
taxes, the government would be paralyzed for lack of the
motive power to activate and operate it.
• Every person who is able to must contribute his share in
the running of the government.
• The government, for its part, is expected to respond in the
form of tangible and intangible benefits intended to
improve the lives of the people and enhance their moral
and material values.
BENEFITS-RECEIVED THEORY;
SYMBIOTIC RELATIONSHIP
• Briefly explain the following doctrines: lifeblood
doctrine; necessity theory; benefits received; doctrine of
symbiotic relationship. (5%).
PURPOSES OF TAXATION
• INHERENT
• Is it also inherent in local governments?
• May Congress abolish the power of local governments to tax?
• LEGISLATIVE
• Subject, purpose, object, method
• As a general rule, it is not delegated to the executive or judicial
departments
• Exceptions?
• LIMITED
• Subject to inherent and constitutional limitations
ASPECTS OF TAXATION ( L A P )
• FINANCIAL ADEQUACY
• ADMINISTRATIVE FEASIBILITY
• THEORETICAL JUSTICE
ATTRIBUTES OF A SOUND
TAX SYSTEM
Explain the principles of a sound tax system.
(3%)
TAXES: definition
• Forced
• Pecuniary burden payable in money
• Jurisdictional
• Levied by the legislative body
• For a public purpose
• Personal to the taxpayer
• Assessed in accordance with a reasonable rule of
apportionment
TAXES: Characteristics
• SIMILARITIES
• Inherent
• Independent
• Interfere
• Legislative
• Equivalent compensation
DOUBLE TAXATION
• Impact vs. incidence of taxation
• Impact
• incidence
• Direct vs. indirect tax
• Direct
• indirect
• Taxpayers suit
Other concepts
• A GRANT OF IMMUNITY, EXPRESS OR IMPLIED,
• TO PARTICULAR PERSONS OR CORPORATIONS
OR TO PERSONS OR CORPORATIONS OF A
PARTICULAR CLASS,
• FROM A TAX UPON PROPERTY OR AN EXCISE
(RIGHT)
• WHICH PERSONS AND CORPORATIONS
GENERALLY WITHIN THE SAME TAXING
DISTRICT ARE OBLIGED TO PAY
TAXPAYERS’ SUIT