Evolution of Taxation

The word 'tax' first appeared in the English language only in the 14th century. It derives
from the Latin taxare which means 'to assess'. Before that, English used the related
word 'task', derived from Old French. For a while, 'task' and 'tax' were both in common
use, the first requiring labour, the second money.

TAX- the life blood of the government

The Inherent powers of the state are as follows:

1. Power of Taxation
2. Police Power
3. Power of Eminent Domain

Inherent defined:
As being inherent, it means that as long as the state exists, this power can never be taken away

Pre-Spanish Period
 Buwis/Handug

-Purpose: Proteksyon

-There was no national government.

-Non-payment of taxes was already punishable

-3 Social class (Martinez et.al. 2018)

1. Tumao- Royal class

2. Timawa- middle class, warriors, free men, -the only class to pay taxes

3. Oripun- commoners and slaves-

-Priestly class- scribes task to record history and tributes

Spanish Period

Imposed payment of tributos(tributes)

Purpose: To generate resources, to finance the maintenance of islands, such as salaries of
government officials and expenses of clergy.

Problem: Dispersed nature of settlements

Solution: Reduccion or Pueblo System-Filipinos were gathered and awarded plots of land to till.

Head: Encomienderos

Tax Exempted: principals; alcaldes, gobernadores, cabezas de barangay, soldiers, gov. officials,
vagrants

From subsistence farming to intensive agricultural system

Form of tax- Half cash/Half Goods or produce

Manila Acapulco Trade

1820-Mexico became independent

1884 -tribute was put to stopped – replaced by poll tax- cedula personal

 Tribute- By family
 Cedula- Personal and progressive

1878- added direct and indirect taxes

 Urbana tax
 Industria tax
 Exports and imports

Other form of taxation under Monopolies:

 Stamped paper
 Liquor
 Cockpits
 Opium
 Tobacco
 Forced labor/ polo System which lead to death rate and flight to mountains

Characteristics:

 heavy burden, corruption of principals, former datus, less taxed principals and heavily
tax peasants, made rich richer and the poor poorer.
 Many kinds of taxes
 No fixed rule only their whim
 No receipt- no amount -only paid remarks

American Period

1898- 1903
Make a self-sufficient economy
Followed the Spanish system of taxation with some modification (outdated & regressive)

Modification
 Suspended the sale of opium, lottery, and mint charges for coinage money
  Urbana tax to - real state tax as land tax

Problems:

 Tax evasion was prevalent

 No fixed rule in land tax
 Collecting of taxes

Solution:

 Internal Revenue law of 1904

1904- BIR was created ,John S. Hord as First Commissioner

Under Filipinization from 1918 -1938

BIR First Collectors
- Wenceslao Trinidad
- Juan Posadas
- Alfredo Yatao

Prescribe the ten major sources of revenue

1. Firms
2. Excise taxes
3. Taxes on banks and bankers
4. Document stamp taxes
5. Cedula
6. Insurance
7. Forest products
8. Mining
9. Business
10. Occupational licenses

 Cedula went through changes in new law- which resulted to great decline of revenues.

New sources of tax

 Income tax
 Inheritance tax
 National lottery
However, these new creations were not enough to increase government revenues.

Commonwealth Period

Modification;

1. Increase tax rates (income, corporation)

2. 1937, cedula was abolished
3. residence tax was imposed on every citizen aged 18
4. 1939, drafted the National Revenue Code

Problems:

 Still, the lower class felt the bulk of the burden of taxation
 Slow growth in agriculture sector
 No incentive for industrial investment
 Disproportionate share of the tax burden
 World war 2

Japanese Military Administration

 Continued the tax system under Commonwealth

 Foreign trade fell
 Tax collection was difficult
 Expenditure of the Japanese military grew greatly and they issued military notes in order
to cover the costs of the war.

Post War Period: Fiscal Policy

What Is Fiscal Policy?

Fiscal policy refers to the use of government spending and tax policies to influence economic
conditions, especially macroeconomic conditions, including aggregate demand for goods and
services, employment, inflation, and economic growth.

What happened in the Philippines in 1946?

 Manuel Roxas

On July 4, 1946, the United States formally recognized the independence of the Republic of the
Philippines. The independence of the Philippines was marked by Manuel Roxas retaking his oath
as President of the Philippines, eliminating the pledge of allegiance to the United States required
prior to independence.

Problems:

 Economic situation was so problematic

 1949, severe lack of funds

Elpidio Quirino
- The impetus for economic growth
- Implementation of import and exchange controls
- Expansion of manufacturing sector
- New taxed measures were passed
- Tax revenue increased in 1953 compared to 1948

- Magsaysay, Garcia, Macapagal promised to study the tax structure and policy under
RA 2211 to make way for a more robust and efficient tax scheme.

Problems:

- Post was Fiscal policy remained regressive and characterized by the overburdening of
lowest classes of society.
- Rise of corruption
- 1959 to 1968, no tax legislation passes
- Many are Filipino businessmen are in Congress
- Poor collection of tax
- Public funds were lost to corruption
 Marcos

 Heavily dependent on indirect taxes

 Tax system remained unresponsive

Corazon Aquino
-1986 Tax Reform Program
-VAT- increase rate of taxes in domestic goods and services
-Creation of Department of Finance under EO 127

Fidel Ramos

-Continued economic growth

-1997 Comprehensive Tax Reform Program
-VAT was broadened

Gloria
-increase in government spending without adjusting tax collections
-Large deficit from 2002 to 2004 (Candelaria et.al.)
-EVAT under RA 9937

Aquino
-no new taxes would be imposed except from existing taxes
- RA 10351 or the SIN TAX LAW

Duterte
- Promised tax reform
- Lower income tax
- Limit VAT exemptions
- Increase excise tax
-