General Principles of Taxation

Taxation- one of the inherent powers of the State

Purpose- raise revenues
Why do we need to study?
Sound Knowledge of the basic principles., Interpretation of tax rulings,
1. Understanding and interpretation of the tax ruling

Taxation- inherent sovereign power

Pecuniary burden - money

Elements
1. Enforced proportional contribution from person
2. Imposed by the sate in its sovereign capacity
3. Levied for the support of the government

2 concepts
1. Power to tax(noun)
2. Act or the process to tax(verb)

Nature
1. Inherent in sovereignty
2. Legislative in character

Aspects phases
1. Levying stage-legislature NIRC
2. Assessment and collection
3. Payment of the tax

Implementation - executive
Power to tax- legislative

Purposes and objectives

1. Revenue raising
2. Non revenue
A. Promotion of general welfare(police power)
B. Regulation(caltex vs coa)
C. Reduction of social inequality(evolve a progressive tax system)
D. Encourage economic growth
E. Protectionism(protect local industries against foreign competition)
Theory of taxation Basis
1. Lifeblood theory- lifeblood of the state,
2. Necessity theory- State cannot continue without levying tax
3. Doctrine Symbiotic relationship
4. Jurisdiction over subjects and objects

Kinds of Taxes
1. As to Subject matter
Poll tax
Property tax
Excise tax
2. As to who bears the burden
a) Direct taxation- where the statutory tax payer is the one collected example income tax
b) Indirect taxation- where the statutory tax payer may pass the burden to another example
vat
3. As to the determination of amount
a) Specific example for gasoline
b) Ad valorem- example value added tax
4. As to scope
a) National taxes
b) Municipal or local taxes
5. As to gradation
A. Progressive
B. Regressive- more indirect than direct

The principles of a sound tax system are

fiscal adequacy, administrative feasibility, and theoretical justice.
Fiscal adequacy means the sources of revenue must be sufficient to meet government expenditures
and other public needs.
Administrative feasibility means tax laws and regulations must be capable of being effectively
enforced with the least inconvenience to the taxpayer.
And theoretical justice means that a sound tax system must be based on the taxpayers’ ability to pay.

tax as distinguished from other forms of exactions

- because remedies involve and different laws govern. Specially in issues of double taxations
1. If one claim is tax and the other is not, then no double taxation exist.
The purpose of tax is to raise revenue wh

ile the purpose of a license fee is for regulation only.

Impact and Incidence of Taxation!

The term impact is used to express the immediate result of or original imposition of the tax. The impact of a tax is on
the person on whom it is imposed first. Thus, the person who is Habile to pay the tax to the government bears its
impact. The impact of a tax, as such, denotes the act of impinging.

Inherent limitations