Professional Documents
Culture Documents
Basic Concepts of Taxation1
Basic Concepts of Taxation1
1. Being inherent powers of the government, the State can exercise these powers
without constitutional grant although the conditions for their exercise may be
prescribed by the constitution.
2. These are ways by the which the State interferes with the private rights and
property.
3. They are legislative in nature and character.
4. Presuppose on equivalent compensation received, directly or indirectly, by the
persons affected.
The following are the differences among the 3 powers of the government
1. As to nature
Taxation – power to enforce contributions to raise funds.
Police Power – make and implement laws for the general welfare of the people.
Eminent Domain – power to take private property for public use with just
compensation.
2. AS TO AUTHORITY
Taxation and police power can only be exercised by the government only.
Eminent domain – exercised by the government and may be granted to public
service/utility companies.
3. AS TO PERSONS AFFECTED
Taxation and police power – community or class of individuals and applies to all
persons, property and activities that may be subject thereto.
Eminent Domain – owner of property only.
4. AS TO TYPE OF PROPERTY
Taxation and Eminent Domain – property is devoted for public use
Police Power – property is harmful or intended for unpleasant purposes and as such
taken and destroyed.
5. AS TO EFFECT
Taxation – contribution becomes public funds
Police Power – No transfer of title
Eminent domain – Transfer of title to property
6. AS TO RIGHTS AFFECTED
Taxation and Eminent Domain – Property right
Police power – Property right and liberty
7. AS TO SCOPE
Taxation – comprehensive (includes person, property and rights or activity)
Police Power – Power to make and implement the law
Eminent Domain – Power to take private property for public use
8. AS TO BENEFITS RECEIVED
Taxation – in the form of protection and benefits received from the government
Police Power – Maintenance of economic standard of society
Eminent Domain – market value of the property taken
9. AS TO AMOUNT OF IMPOSITION
Taxation – No limit
Police Power – sufficient to cover cost of the license and the necessary expenses of
police surveillance and regulation
Eminent Domain – No imposition
II. PURPOSE OF TAXATION
Primary purpose – to raise revenues for the government
Secondary purpose – to attain social and economic ends.
III. CHARACTERISTICS OF TAXATION
1. Inherent Power
2. Essentially a legislative function
3. Subject to inherent and constitutional limitations
4. For public purpose
5. The strongest of all inherent powers of the government
6. Subject to international Comity
7. Generally payable in money
8. Territorial in scope
IV. What are taxes?
Are enforced proportional contributions from persons and property, levied by the law-
making body of the state by virtue of its sovereignty for the support of the government and
all public needs.
V. ESSENTIAL CHARACTERISTICS OF TAXES
A. Compulsory contribution
B. Generally payable in money
C. Imposed for public purpose
D. Levied by the law-making body of the State
E. Levied within the legal and territorial jurisdiction of the State.
F. Assessed in accordance with reasonable rule of apportionment.
VI. THEORY OF TAXATION
A. Necessity theory – the existence of the government is a necessity and to pay for the
expenses of governance, there must be enforced contributions from persons and
properties under the territorial jurisdiction of the taxing state.
B. Lifeblood doctrine – without taxes, no government can exist.
VII. MANIFESTATION OF THE LIFEBLOOD DOCTRINE THEORY:
A. No estoppel against the government
B. Collection of Taxes cannot be enjoined by injunction
C. Taxes could not be the subject of compensation or set-off
D. A valid tax may result in the destruction of taxpayer’s property.
E. Right to select objects of taxation.
VIII. BASIS OF TAXATION:
The government shall render service to the people and the people shall show support to the
government by paying the right amount of taxes.
B. CONSTITUTIONAL LIMITATIONS
-limitations expressly stated in the constitution or implied from its provisions.
B. TAX VS PENALTY
Tax is imposed to raise revenues while penalty is imposed to regulate conduct through
punishment of an act deemed injurious to others.
Tax is imposed by the government while penalty is imposed by the government or
private individual
Tax arises from law while penalty arises from violation of law or contract.
Tax is generally payable in money while penalty is payable in money or in kind.
F. TAX VS DEBT
Tax is based on law while debt is based on contract
Tax is not assignable while debt can be assigned
Tax is generally payable in money while debt can be paid in kind or in money
Non-payment of taxes results to imprisonment while non-payment of debt does not
result to imprisonment except if the debt arises from a crime.