Puno, Katherine Lorn G.
BS Chemistry 2-1
Taxation in Spanish Philippines
Taxes imposed by the Spanish Government in
the Philippines
Taxes during the Spanish period was
compulsory. All the Spanish Colonies in
America and the Philippines were required to
pay taxes for two reasons.
1. as recognition of Spain's Sovereignty over
the Colonies.
2. To defray the expenses of pacification (The
act of forcibly suppressing hostility within the
colonies) and governance, thereafter.
 Tributo was a general tax paid by the
Filipinos to Spain which amounted to
eight reales. Those who were required
to pay the tributo the:
a. 18 to 50 years old males
b. The Carpenters, bricklayers,
blacksmiths, tailors and
shoemakers
C. Town workers such as those
in road construction, and those
whose is public in nature.
 Sanctorum was a tax in the amount of
3 reales. These were required for the
cost of Christianization, including the
construction of the churches and the
purchase of materials for religious
celebrations
 Donativo was the tax in the amount of
half real for the military campaign of
the government against the muslims.
In the later years, however, the
amount collected from donativo was
almost exclusively used for the
Spanish fort in Zamboanga.
 Caja de comunidad was a tax
collected in the amount of 1 real for the
incurred expenses of the town in the
construction of roads, repair of
bridges, or the improvement of public
buildings.
 Polo y servicio is the system of forced
labor which evolved within the
framework of the encomienda system,
introduced into the South American
colonies by the Conquistadores and
Catholic priests who accompanied
them. It was present in almost all of the
Spanish colonial government around
the world. Polo y servicio is the forced
labor for 40 days of men ranging from
16 to 60 years of age who were
obligated to give personal services to
community projects. One could be
exempted from polo by paying the falla
(corruption of the Spanish Falta,
meaning "absence"), a daily fine of one
and a half real.
 Bandala System implemented by
Spanish authorities in the Philippines
that required native Filipino farmers
to sell their goods to the government.
Tax Reform of 1884
One of the good reforms which Spain
introduced in the 19th century was the
Tax Reform o 1884, as provided by the
Royal Decree on March 6, 1884, this tax
reform contained two important
provisions.
1. Abolition of the hated Tribute and its
replacement of Cedula Tax and;
2. Reduction of the 40-day annual forced
labor (polo) to 15 days.
Cedula Personales
Cedulas were first issued based on the
Royal Decree on March 6, 1884. All men
and women residents of the island-
Spaniards, foreigners, and natives- who
 were over 18 years old were required to
obtain a cedula. The only exceptions were
the Chinese, who paid another poll tax, the
remontados d infieles,that were not
subject to local administration, and the
natives and colonist of the archipelago of
Jolo and of the islands of Balabac and
Palawan.
All in all, there were 16 different classes of
cedulas. Originally, there were 9 classes
taxed, the rates of Taxes ranged from 1.50
to 25 Pesos, and a tenth, grantis, for priest,
soldiers and privileged classes.
1878- two direct taxes were added.
Urbana- tax on the annual rental value of
urban real estate
Industria- tax on salaries, dividends, and
profits.
Taxation under the Americans
1898-1903- The americans followed the
Spanish system of taxation with some
modifications.
Internal Revenue Law of 1904- passed as
reaction to the problems regarding collection
of land tax. It prescribed ten major sources of
revenue: (1) license taxes on firms dealing
with alcoholic beverages and tobacco, (2)
excise tax on alcoholic beverages and tobacco
products (3) taxes on banks and bankers (4)
document stamp taxes (5) the cedula (6) taxes
on insurance and insurance companies (7)
taxes on forest products (8) mining
concessions (9) taxes on business and
manufacturing (10) occupational licenses.
In 1907 some provinces were authorized to
double the fee for the cedula to support the
construction and maintenance of roads.
In 1913, the Underwood- Simmons Tariff
Act was passed, resulting to a reduction in the
revenue of the government as export taxes
levied on sugar, tobacco, hemp, and copra
were lifted.
Governor General Francis Burton Harrison
urged that tax receipts be increased to make
up for the loss of revenue.
New sources of revenue were introduced later
on. In 1914, income tax was introduced. In
1919, inheritance tax was created. In 1932,
national lottery was establish to create more
revenue for the government.
Taxation during Commonwealth
Period
In 1936, Income tax rates were increased.
Income tax rates of corporations were also
increased.
In 1937, cedula tax was abolished but in 1940,
a residence tax was imposed on every citizen
aged 18 years old and in every corporations.
In 1939, the Commonwealth government
drafted the National Internal Revenue Code.
1. The normal tax of three percent and
the surtax on income was replaced by
a single tax a progressive rate.
2. Personal exemptions were reduced
3. Corporation income tax was slightly
increased by introducing taxes on
inherited estates or gifts donated in
the name of dead person
4. The cumulative sales tax was replaced
by a single turnover tax of 10% on
luxuries.
5. Taxes on liquors, cigarettes, forest
products, and mining were increased.
6. Dividends were made taxable.
 Fiscal Policy from 1946 to
Present
Although the Philippines was declared
independent by the American government,
but the country needed financial support from
the American government to support the
rehabilitation of the country.
In 1949, there was a severe lack of funds in
many aspects of governance such as military
and educational sectors.
United States advised the adoption of direct
taxation but the administration of President
Manuel Roxas declined the proposal.
Economic growth came during the
administration of President Elpidio Quirino
through implementation of import and
exchange controls that led to import
substitution development.
The period of post-war also saw a rise in
corruption.
From 1959-1968, Congress did not pass any
tax legislation despite important changes in
the economy, and the vested interests of
Filipino businessmen in Cogress will manifest
in many instances such as the rejection of
taxes on imports.
Under the Marcos regime, the tax system
remains regressive. 70% of tax collection was
from indirect tax system.
As Corazon Aquino took the helm of the
government after the EDSA Revokution, she
reformed the system through the 1986 Tax
Reform Program.
A major reform in the tax system introduced
under the term of Aquino was the introduction
of value-added tax (VAT).
The VAT Law was signed in 1986 and was put
to effect in 1988.
The succeeding term of Joseph Estrada was
too short to effect any change in the tax
system.
In Gloria Macapagal Arroyo’s term, she
undertook increased government spending
without adjusting tax collections. This resulted
to large deficits from 2002-2004. The
government had to look for additional sources
of revenue. In 2005, the Expanded Value
Added Tax (E-VAT) was signed as Republic
Act 9337. This expanded the VAT base,
subjecting to VAT energy products such as
electricity, coal, and petroleum products. VAT
rate also increased from 10% to 12%.
In President Benigno Aquino III succeeded
President Arroyo in 2010, he promised that no
new taxes will be imposed. The administration
ventured into the adjustment of excise tax on
liquors and cigarettes or the Sin Tax Reform.
The administration of President Rodrigo
Duterte promised tax reforms particularly on
income tax as it vowed to lower income taxes
shouldered by working Filipino. The proposed
tax reform also seeks to limit VAT exemptions
and increase excise taxes on petroleum
products and automobiles.