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Lesson 1 Meaning and Nature of Taxation PDF
Lesson 1 Meaning and Nature of Taxation PDF
Introduction
Taxation is one of the inherent powers of the sovereign state.
What is inherent power? Why we need to pay taxes? These
are some of the questions that can be answered by studying
Lesson 1 of this module.
Taxation has been defined as the power of the sovereign to impose burdens or charges
upon persons, property or property rights for the use and support of the government to be able to
discharge its functions. It is one of the inherent powers of the state – “power of the sovereign”.
Police Eminent
Power Domain
Taxation
o Compulsory
o Comprehensive
o Involuntary
Purpose of
Taxation
It is a theory developed by supply-side
economist Arthur Laffer to show the
relationship between tax rates and the
amount of tax revenue collected by
governments.
1. Levying stage – This is legislative in character. This is the role of Congress – determining
and enacting a tax law. It is Congress which determines the rate and the kind of tax
and the facility or mode of collecting the tax. Once you have a complete law, it is the
executive branch which implements that tax law.
2. Assessment/Collection – Tax Administration
3. Payment of the Tax – Tax Administration
Situs of Taxation
Situs is a Latin term for “place” or “location”. It refers to the place where taxes are to be paid.
➢ Income tax - this is paid either in the place where the income is earned or the place of
residence of the taxpayer.
➢ Real property tax - this is paid where the property is situated.
➢ Personal property tax - taxes on intangible properties are paid in the place where the
property is located, similar to real property tax. Situs of taxation of intangible properties is
the owner’s domicile. This refers to the place of permanent residence of the owner.
➢ Business and occupation taxes - this is paid in the place where the business or occupation
is located.
Objects of Taxation
➢ Individuals who earn a considerable amount of income as a worker, or as a businessman
in partnerships or corporations, including those who inherited a property or given a gift or
donation of a considerable value;
➢ Tangible and intangible properties, whether personal properties (movable properties) that
can be moved or relocated or real properties (immovable properties); and
➢ Transactions, consumptions interests, imports and exports; and privileges
Good Job! You have just finish lesson 1. You can now proceed to lesson 2 which
talks about the history, theory, and the legal basis of taxation.