TAXATION LAW I l PREMIDS l Atty.
Amago l By: Tanya Ibanez
HISTORY OF TAXATION
HISTORICAL BACKGROUND
EGYPT
Tax on cooking oil
During the reign of the Egyptian pharaohs, tax collectors were known
as scribes. The scribes imposed taxes on cooking oil and to ensure
that the people were not avoiding said tax, the scribes would audit the
households.
GREECE
Taxes for wartime expenditure
The Athenians would impose a tax in times of war, known as
aseisphora which was used to pay for wartime expenditure. They
were the first ones to introduce the concept of tax refund/credit/carry-
over, because when additional resources were gained by the war
effort, such were used to refund the tax to the citizens.
Monthly poll tax
Athenians imposed a monthly poll tax on foreigners, or those who did
not have both an Athenian mother and father. One drachma for men
and a half drachma for women. The tax was referred to as metoikion.
ROMAN EMPIRE
Customs duties tax
Tax collectors in this time were known as publican. The earliest in
Rome were customs duties on imports and exports called portoria.
The Romans were to the first ones to introduce the Tax Haven, where
in one particular area no tax were collected.
Inheritance tax
Caesar Augustus, the most brilliant tax strategist of the Roman Empire,
virtually eliminated the publicani as tax collectors for the central
government. During this period, cities were given the responsibility for
collecting taxes. Augustus instituted a 5% inheritance tax to provide
for retirement funds for the military.
Sales tax
Also, a 1 percent sales tax was imposed.
GREAT BRITIAN
Income tax
Great Britain was the first to introduce income tax. The first tax
assessed in England was during the occupation by the Roman Empire.
Legend has it that Leofric, Earl of Mercia, imposed very high taxes. His
wife, Lady Godiva, asked him that the taxes be reduced. He obliged,
on the condition that Lady Godiva roam the town naked while riding a
horse. Lady Godiva did so, hence the tax was minimized.
PHILIPPINES
In the Philippines, taxation can be traced during the Spanish era where
several taxes and monopolies were established.
Resident tax
The resident tax during the Spanish times were known as tribute. It
may be paid in cash or kind. In 1884, however, the tribute was
replaced by the cedula personal or personal identity paper, which is
equivalent to the present community tax certificate.
Bandala system
A form of direct taxes that the Spaniards implemented where the
natives were coerced to sell their products to the government at very
low prices. The collection of taxes were specific in a particular area
rebellious to the Spaniards.
Q. May a legislative body enact laws to raise revenue in the
Cedula Personal
A legal identity document issued by cities and municipalities to all
persons that have reached the age of majority and upon payment of a
community tax. The cedula served as an identification card that had to
be carried at all times. One who cannot present the same could be
detained for being indocumentado.
TN: Andres Bonifacio and other Katipuneros tore their cedulas in
August 1896, sparking the start of the Philippine Revolution.
Community tax
This was imposed by the Americans when CA No. 465 took effect,
mandating the imposition of a base resident tax of 50 cents and an
additional tax of one peso based on factors such as income and real
estate holdings. The payment of this tax merits the issue of a
residence certificate.
Eventually, Philippines passed the Local Government Code, after
gaining independence, mandating the payment of community tax and
proof of entries is the community tax certificate.
Polo y servicio
Forced labor for 40 days of men ranging from 16 to 60 years old who
were obligated to give personal services to the community projects.
One could be exempted from the polo by paying a fee called falla.
DIFFERENT TAXES UNDER THE NIRC
Different taxes under the National Internal Revenue Code
A. Income tax
A. Individuals
B. Corporation
C. Other persons
B. Business taxes
A. Value-added tax
B. Other percentage taxes
C. Transfer taxes
A. Donor’s tax
B. Estate tax
TN: Taxation is a destructive power of the State which interferes with
personal and property rights of the people and takes a portion of their
property from them for the support of the government. Being a destructive
power, it can be used to kill and activity or business if it wants to. Thus, it
must be exercised with caution.
DEFINITION OF TAXATION
TAXATION
It is the inherent power of the State to demand enforced contributions
from the people to raise revenue in order to defray the necessary
expenses of the government.
Q. Define taxes.
Taxes are the enforced proportional contributions from properties and
persons levied by the State by virtue of its sovereignty for the support
of the government and all public needs.
TN: Taxation refers to the power to collect money, while tax is the money itself.
Q. Can an LGU validly enact a law imposing amusement tax on
local swimming pools not provided in the LGC or other laws?
No. Cebu City is not sovereign thus there is no inherent power of
taxation. Thus, it can impose only those taxes delegated to it by the
legislative branch of the national government. Only Congress have an
unlimited power to exercise the power to tax.
absence of a constitutional provision granting such body the
UNIVERSITY OF SAN CARLOS COLLEGE OF LAW 1 | P a g e
TAXATION LAW I l PREMIDS l Atty. Amago l By: Tanya Ibanez
power to tax?
Yes. Taxation is inherent in the State, being an attribute of
sovereignty. Thus, the legislature can enact laws to raise revenues
even without the grant of said power in the Constitution. It must be
noted that Constitutional provisions relating to taxation do not operate
as grants of power to the Government, but merely constitute as
limitations upon a power which would otherwise be practically without
limit.
Re: How tax refunds are construed
Paseo Realty v. CA
Taxation is a destructive power which interferes with the personal and
property rights of the people and takes from them a portion of their
property for the support of the government. And since taxes are what
we pay for civilized society, or are the lifeblood of the nation, the law
frowns against exemptions from taxation and statutes granting tax
exemptions are thus construed strictissimi juris against the taxpayer
and liberally in favor of the taxing authority.
A claim of refund or exemption from tax payments must be clearly
shown and be based on language in the law too plain to be mistaken.
Elsewise stated, taxation is the rule, exemption therefrom is the
exception.
Case discussion: The confusion as to petitioner’s entitlement to a refund could
altogether have been avoided had it presented its tax return for 1990. The grant
of a refund is founded on the assumption that the tax return is valid, i.e., that
the facts stated therein are true and correct. Without the tax return, it is error to
grant a refund since it would be virtually impossible to determine whether the
proper taxes have been assessed and paid.
Re: Scope of authority of a province to impose amusement tax
Pelizloy Realty v. Province of Benguet
The power to tax is an attribute of sovereignty, and as such, inheres in
the State. Such, however, is not true for provinces, cities,
municipalities and barangays as they are not the sovereign. Rather,
they are mere territorial and political subdivisions of the Republic of
the Philippines.
A municipal corporation unlike a sovereign state is clothed with no
inherent power of taxation. The charter or statute must plainly show
an intent to confer that power or the municipality, cannot assume it.
And the power when granted is to be construed in strictissimi juris.
Any doubt or ambiguity arising out of the term used in granting that
power must be resolved against the municipality. Therefore, the power
of a province to tax is limited to the extent that such power is
delegated to it either by the Constitution or by statute.
Case discussion: Resorts, swimming pools, bath houses, hot springs and tourist
spots do not belong to the same category or class as theatres, cinemas, concert
halls, circuses, and boxing stadia. It follows that they cannot be considered as
among the ‘other places of amusement’ contemplated by Section 140 of the LGC
and which may properly be subject to amusement taxes.
NATURE OF THE POWER OF TAXATION
Nature of the power of taxation
A. Inherent attribute of sovereignty
B. Legislative in character
C. Subject to constitutional and inherent limitations (will be
discussed later in Chapter XIV)
INHERENT ATTRIBUTE OF SOVEREIGNTY
INHERENT ATTRIBUTE OF SOVEREIGNTY
The power of taxation is an essential and inherent attribute of
sovereignty, belonging as a matter of right to every independent
government. It exists apart from constitutions and without being
expressly conferred by the people. Hence, it can be exercised by the
government even if the Constitution is entirely silent on the subject.
Basis – Lifeblood theory
The power to tax proceeds upon the theory that the existence of a
government is a necessity. No sovereign State can continue to exist
without the means to pay its expenses, and for those means, it has the
right to compel all citizens and property within its limit to contribute.
Manifestations
A. Taxes can be imposed even in the absence of a constitutional
provision.
B. The state can select the object and subject matter of taxation.
Thus, unlimited.
C. No injunction in the collection of taxes.
Xpn: There is a pending case filed in the CTA to enjoin the collection of tax.
D. Taxation is not subject to set-off.
Xpn: When both debts are due and demandable and has been fully
liquidated.
Q. What is the concept of equitable recoupment?
A claim for refund barred by prescription may be allowed to offset
unsettled tax liabilities. This doctrine finds no application in the
Philippines.
Concurring and Dissenting Opinion of Justice Leonen in Manila
Memorial v. Sec of DSWD
The power to tax is plenary and unlimited in its range, acknowledging
in its very nature no limits, so that the principal check against its abuse
is to be found only in the responsibility of the legislature (which
imposes the tax) to its constituency who are to pay it. Nevertheless, it
is circumscribed by constitutional limitations. At the same time, like
any other statute, tax legislation carries a presumption of
constitutionality.
The power to tax is a principal attribute of sovereignty. Such inherent
power of the State anchors on its "social contract with its citizens
which obliges it to promote public interest and common good.
LEGISLATIVE IN CHARACTER
LEGISLATIVE IN CHARACTER
The power to tax is peculiarly and exclusively legislative and cannot be
exercised by the executive or judicial branch of the government.
Hence, only Congress, our national legislative body, can impose taxes.
However, the levy of a tax may also be made by a local legislative
body, subject to such limitations as may be provided by law.
GR: The power to tax is essentially a legislative function and which the
central legislative body cannot delegate to other branches.
XPNS: (Permissive delegation of the power to tax)
A. To local governments in respect of matters of local concern
TN: Through the Local Government Code of 1991
B. When allowed by the Constitution
TN: To the President with respect to tariff rates, import and export quotas,
flexible tariff clause, etc.
C. Administrative regulations (Assessment and Collection)
TN: Two tests to determine the validity of the delegation to administrative
agencies:
1. Completeness test
2. Sufficient standard test
Basis of the legislative power to tax
Taxes are a grant of the people who are taxed and the grant must be
made by the immediate representatives of the people. Hence, it should
be our representatives who must levy and impose taxes.
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