LIMITATIONS ON THE POWER OF TAXATION

The power of taxation, is however, subject to constitutional and inherent limitations.

Constitutional limitations are those provided for in the constitution or implied from its provisions,
while inherent limitations are restrictions to the power to tax attached to its nature.

Inherent Limitations (PTIEN)

1. Purpose. Taxes may be levied only for public purpose;

2. Territoriality. The State may tax persons and properties under its jurisdiction;

3. International Comity. the property of a foreign State may not be taxed by another.

4. Exemption. Government agencies performing governmental functions are exempt from

taxation

5. Non-delegation. The power to tax being legislative in nature may not be delegated.
(subject to exceptions)
Constitutional Limitations (DUNNPPECN)
1. Due process of law and equal protection of the laws . (sec, 1, Art. 3) Any deprivation of
life, liberty or property is with due process if it is done under the authority of a valid law
and after compliance with fair and reasonable methods or procedure prescribed. The
power to tax, can be exercised only for a constitutionally valid public purpose and the
subject of taxation must be within the taxing jurisdiction of the state. The government
may not utilize any form of assessment or review which is arbitrary, unjust and which
denies the taxpayer a fair opportunity to assert his rights before a competent tribunal. All
persons subject to legislation shall be treated alike under like circumstances and
conditions, both in the privileges conferred in liabilities imposed. Persons and properties
to be taxed shall be group, and all the same class shall be subject to the same rate and
the tax shall be administered impartially upon them.

2. Uniformity and equity in taxation (sec 28(1) Art VI) All taxable articles or properties of the
same class shall be taxed at the same rate. Uniformity implies equality in burden not in
amount. Equity requires that the apportionment of the tax burden be more or less just in
the light of the taxpayers ability to bear the tax burden.

3. Non-imprisonment for non-payment of poll tax (sec. 20, Art III) A person cannot be
imprisoned for non-payment of community tax, but may be imprisoned for other
violations of the community tax law, such as falsification of the community tax certificate,
or for failure to pay other taxes.

4. Non-impairment of obligations and contracts, sec 10, Art III. the obligation of a contract
is impaired when its terms and conditions are changed by law or by a party without the
consent of the other, thereby weakening the position or the rights of the latter. IF a tax
exemption granted by law and of the nature of a contract between the taxpayer and the
 government is revoked by a later taxing law, the said law shall not be valid, because it
will impair the obligation of contract.

5. Prohibition against infringement of religious freedom Sec 5, Art III, it has been said that
the constitutional guarantee of the free exercise and enjoyment of religious profession
and worship, which carries the right to disseminate religious belief and information, is
violated by the imposition of a license fee on the distribution and sale of bibles and other
religious literatures not for profit by a non-stock, non-profit religious corporation.

6. Prohibition against appropriations for religious purposes, sec 29, (2) Art. VI, Congress
cannot appropriate funds for a private purpose, or for the benefit of any priest, preacher
or minister or for the support of any sect, church except when such priest, preacher, is
assigned to the armed forces or to any penal institutions, orphanage or leprosarium.

7. Exemption of all revenues and assets of non-stock, non-profit educational institutions

used actually, directly, and exclusively for educational purposes from income, property
and donor’s taxes and custom duties (sec. 4 (3 and 4) art. XIV.

8. Concurrence by a majority of all members of Congress in the passage of a law granting

tax exemptions. Sec. 28 (4) Art. VI.

9. Non-impairment of the jurisdiction of the Supreme Court in tax cases.