SPIT – August 19, 2019

Fiscal Adequacy = Collection ~ What is needed

Deficit – Collection < What is needed

Deficit Spending – spending despite having no/lacking tax collection

 Government resorts to other means to be able to meet such spending

Modes / remedies of shortage in tax collection

 Government bonds and securities
 Inter-country loans and transactions
 Asset privatization trusts
o Privatization of utilities/assets by corporations
o FTIs

What if: Collection > What is needed?

Then: Excess
Negative: Too much tax would be too much burden against the people

Administrative Feasibility - tax collection is easily enforceable

Can taxes be paid in kind, or in other property?

Theoretically yes. No law prohibits it, but then again it is unsound and it is impractical
However the tender of payment shall be in cash – the property given is usually sold in public
auction

Grounds for compromise

 Penalties or assessments cannot be compromised
 Liabilities arising from contract cannot be avoided here

Theoretical Justice – tax is based on the paying capacity or capability of persons

 Excessive taxes are unconstitutional
o Direct violation of the constitution on the justness and uniformity/equitability of
taxes
Definition and Characteristics of Taxes
 Enforced collection by the State
 For funds to be used by the Government

Characteristics
- Forced charge
- Generally payable in money
- Levied by legislative body
- Levied for public purpose

Customs duties
 Taxes on duties on imports and exports

Taxes v. Toll fees

 Diaz & Timbol v. Secretary of Finance
 Toll fees are dues for use of a property
 Re: PAL v. Edu

3 types of Special Levies (SAF)

 Special Assessment Funds
o Local Gov’t impositions
o Development of projects for a part of their locale
o Depends on the locality
o Apostolic Prefect of Baguio v. City of Baguio
 The SAF is not a tax
 Distinction through source
 Availability of legal compensation
o WON one can set off what he owes to the State with what
the State in turn owes to him

Why can’t taxes be set off against other debts/obligations

When can compensation take place?

 Mambulao Lumber Case – Main Case
 Domingo v. Garlitos
o If both obligations are overdue, they become due and demandable, and by
operation of law must be paid when they are fully liquidated
 Fully liquidated
 Fully determined with exactitude
 IAC v. Francia
 Phoenix Mining
o Liquidation is made possible through audit and investigation by officers of the
BIR
 Fernandez v. Municipality of San Miguel, Bulacan
o Payments cannot be made without there being an appropriation there so made
in a law/ordinance
 Read back on Domingo v. Garlitos