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It is also defined as the act of levying a tax, i.e. the process or means by which the
sovereign, through its law-making body, raises income to defray the necessary
expenses of government. It is a method of apportioning the cost of government
among those who, in some measure, are privileged to enjoy its benefits and must
therefore bear its burdens.
Taxes
Taxes are the enforced proportional contributions from persons and property
levied by the law-making body of the State by virtue of its sovereignty for the
support of the government and all public needs, [Cooley]
They are not arbitrary exactions but contributions levied by authority of law, and
by some rule of proportion which is intended to ensure uniformity of
contribution and a just apportionment of the burdens of government.
Thus:
a. Taxes are enforced contributions
b. Taxes are proportional in character, since taxes are based on one’s ability to
pay.
d. Taxes are for the support of the government and all its public needs.
1. It is an enforced contribution.
2. It is generally payable in money.
3. It is proportionate in character.
4. It is levied on persons, property, or the exercise of a right or privilege
(Excise tax).
5. It is levied by the State which has jurisdiction over the subject or object
of taxation.
6. It is levied by the law-making body of the State.
7. It is levied for public purpose or purposes.
PURPOSES OF TAXATION
PD 1987 which created the Videogram Regulatory Board also imposed a 30% tax
on the gross receipts payable to the local government. SC upheld the validity of
the law ruling that the tax imposed is not only a regulatory but also a revenue
measure prompted by the realizations that earnings of videogram establishments
of around P600 million annually have not been subject to tax, thereby depriving
the government of an additional source of revenue. It is a user tax imposed on
retailers for every video they make available for public viewing. The 30% tax also
served a regulatory purpose: to answer the need for regulating the video
industry, particularly the rampant film piracy, the flagrant violation of
intellectual property rights, and the proliferation of pornographic video tapes.
For example, government may provide tax incentives to protect and promote new
and pioneer industries. The imposition of special duties, like dumping duty,
marking duty, retaliatory duty, and countervailing duty, promote the non-
revenue or sumptuary purpose 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 a right 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 State and its inhabitants. In return for his contribution, the taxpayer
received benefits and protection from 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 the necessary expenses of government. It is a way of apportioning the cost
of government among those who in some measure are privileged to enjoy the
benefits and must therefore bear its burden, [51 Am. Jur. 34].
The power of taxation is essential because the government can neither exist nor
endure without taxation. “Taxes are the lifeblood of the government and their
prompt and certain availability is an imperious need”, [Bull v. United States, 295
U.S. 247, 15 APTR 1069, 1073]. The collection of taxes must be made without
any hindrance if the state is to maintain its orderly existence.
Government projects and infrastructures are made possible through the
availability of funds provided through taxation. The government’s ability to serve
and protect the people depends largely upon taxes. Taxes are what we pay for a
civilized society, [Commissioner v. Algue, 158 SCRA 9].
LIFEBLOOD DOCTRINCE
The lifeblood theory constitutes the theory of taxation, which provides that the
existence of government is a necessity; that government cannot continue without
means to pay its expenses; and that for these means it has a right to compel its
citizens and property within its limits to contribute.
In Commissioner v. Algue, the Supreme Court said that taxes are the lifeblood of
the government and should be collected without necessary hindrance. They are
what we pay for a civilized society. Without taxes, the government would be
paralyzed for lack of motive power to activate and operate it. 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.
By enforcing the tax lien, the BIR availed itself of the most expeditious way to
collect the tax. Taxes are the lifeblood of the government and their prompt and
certain availability is an imperious need, [CIR v. Pineda, 21 SCRA 105].
The government is not bound by the errors committed by its agents. In the
performance of its governmental functions, the State cannot be estopped by the
neglect of its agents and officers. Taxes are the lifeblood of the nation through
which the government agencies continue to operate and with which the state
effects its functions fro the welfare of its constituents. The errors of certain
administrative officers should never be allowed to jeopardize the government’s
financial position, [CIR v. CTA, 234 SCRA 348].
The BIR is authorized to collect estate tax deficiency through the summary
remedy of levying upon the sale of real properties of a decision without the
cognition and authority of the court sitting in probate over the supposed will of
the decedent, because the collection of the estate tax is executive in character. As
such, the estate tax is exempted from the application of the statute on non-
claims, and this is justified by the necessity of government funding, immortalized
in the maxim “Taxes are the lifeblood of the government and should be made in
accordance with law, as any arbitrariness will negate the very reason for
government itself, [Marcos II v. CA, 273 SCRA 47].
Taxes are the lifeblood of the government and so should be collected without
unnecessary hindrance. Philex’s claim that it had no obligation to pay the excise
tax liabilities within the prescribed period since it still has pending claims for
VAT input credit/refund with the BIR is untenable, [Philex Mining Corporation v.
CIR, 294 SCRA 687]
Taxation as stated in the case of Phil. Guaranty Co., Inc. v. Commissioner [13
SCRA 775], is a power predicated upon necessity. It is a necessary burden to
preserve the State’s sovereignty and a means to give the citizenry an army to
resist aggression, a navy to defend its shores from invasion, a corps of civil
servants to serve, public improvements for the enjoyment of the citizenry, and
those which come within the State’s territory and facilities and protection which
a government is supposed to provide.
This theory bases the power of the State to demand and receive taxes on the
reciprocal duties of support and protection. The citizen supports the State by
paying the portion from his property that is demanded in order that he may, by
means thereof, be secured in the enjoyment of the benefits of an organized
society. Thus, the taxpayer cannot question the validity of the tax law on the
ground that payment of such tax will render him impoverished, or lessen his
financial or social standing, because the obligation to pay taxes is involuntary
and compulsory, in exchange for the protection and benefits one receives from
the government.
In return for his contribution, the taxpayer receives the general advantages and
protection which the government affords the taxpayer and his property. One is
compensation or consideration for the other; protection for support and support
for protection.
However, it does not mean that only those who are able to and do pay taxes can
enjoy the privileges and protection given to a citizen by the government.
In fact, from the contribution received, the government renders no special or
commensurate benefit to any particular property or person. The only benefit to
which the taxpayer is entitled is that derived from the enjoyment of the privilege
of living in an organized society established and safeguarded by the devotion of
taxes to public purpose. The government promises nothing to the person taxed
beyond what may be anticipated from an administration of the laws for the
general good, [Lorenzo v. Posadas].
Taxes are essential to the existence of the government. The obligation to pay taxes
rests not upon the privileges enjoyed by or the protection afforded to the citizen
by the government, but upon the necessity of money for the support of the State.
For this reason, no one is allowed to object to or resist payment of taxes solely
because no personal benefit to him can be pointed out as arising from the tax,
[Lorenzo v. Posadas].
DOCTRINE OF SYMBIOTIC RELATIONSHIP
This doctrine is enunciated in CIR v. Algue, Inc. [158 SCRA 9], which states that
“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.
Hence, despite the natural reluctance to surrender part of one’s hard-earned
income to the taxing authorities, every person who is able must contribute his
share in the burden of running 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 material and moral values.”
In Tio v. Videogram Regulatory Board, 151 SCRA 208, the levy of a 30%
tax under PD1987, was imposed primarily for answering the need for regulating
the video industry, particularly the rampant film piracy, the flagrant violation of
intellectual property rights, and the proliferation of pornographic videotapes,
and is therefore valid. While the direct beneficiaries of the said decree is the
movie industry, the citizens are held to be its indirect beneficiaries.