TAXATION PRE-BAR REVIEWER2004
b)The adoption of progressively higher tax rates to reduce inequalities in wealth andincome.c)The increase or decrease of taxes to prevent inflation or ward off depression.
PAL v. Edu, 164 SCRA 320
The legislative intent and purpose behind the law requiring owners of vehicles to pay fortheir registration is mainly to raise funds for the construction and maintenance of highways and,to a much lesser degree, pay for the operating expenses of the administering agency. It ispossible for an exaction to be botha tax and a regulation. License fees are charges, looked to as asource of revenues as well as means of regulation. The fees may properly be regarded as taxeseven though they also serve as an instrument of regulation. If the purpose is primarily revenue,or if revenue is at least one of the real and substantial purposes, then the exaction is properlycalled a tax.
Tio v. Videogram, 151 SCRA 208
PD 1987 which created the Videogram Regulatory Board also imposed a 30% tax on thegross receipts payable to the local government. SC upheld the validity of the law ruling that thetax imposed is not only a regulatory but also a revenue measure prompted by the realizations thatearnings of videogram establishments of around P600 million annually have not been subject totax, thereby depriving the government of an additional source of revenue. It is a user tax imposedon retailers for every video they make available for public viewing. The 30% tax also served aregulatory purpose: to answer the need for regulating the video industry, particularly the rampantfilm piracy, the flagrant violation of intellectual property rights, and the proliferation of pornographic video tapes.
Caltex v. Commissioner, 208 SCRA 755
Taxation is no longer a measure merely to raise revenue to support the existence of government. Taxes may be levied with a regulatory purpose to provide means for therehabilitation and stabilization of a threatened industry which is affected with public interest as tobe within the police power of the State. The oil industry is greatly imbued with public interest as itvitally affects the general welfare.
SUMPTUARY PURPOSE OF TAXATION
More popularly known as the non-revenue or regulatory purpose of taxation. While the primarypurpose of taxation is to raise revenue for the support of the government, taxation is oftenemployed as a devise for regulation by means of which certain effects or conditions envisioned bythe government may be achieved.
For example, government may provide tax incentives to protect and promote new and pioneerindustries. The imposition of special duties, like dumping duty, marking duty, retaliatory duty, andcountervailing duty, promote the non-revenue or sumptuary purpose of taxation.
THEORY AND BASIS OF TAXATION
The power of taxation proceeds upon the theory that the existence of government is a necessity;that it cannot continue without means to pay its expenses; and that for these means, it has aright to compel all its citizens property within its limits to contribute.
The basis of taxation is found in the reciprocal duties of protection and support between the Stateand its inhabitants. In return for his contribution, the taxpayer received benefits and protectionfrom the government. This is the so called “
Benefits received principle”.
Taxation has been defined as the power by which the sovereign raises revenue to defray thenecessary expenses of government. It is a way of apportioning the cost of government amongthose who in some measure are privileged to enjoy the benefits and must therefore bear itsburden, [
51 Am. Jur. 34
The power of taxation is essential because the government can neither exist nor endure withouttaxation. “
Taxes are the lifeblood of the government and their prompt and certainavailability is an imperious need”,
[Bull v. United States, 295 U.S. 247, 15 APTR1069, 1073].
The collection of taxes must be made without any hindrance if the state is tomaintain its orderly existence.
Sigma Rho ( ΣΡ ) reviewers
Sigma Rho Fraternity , College of Law , University of the Philippines