Chapter 1 – General Principles of Taxation

Definition of Taxes
The enforced proportional contributions from persons and property levied by the
lawmaking body of the State by virtue of its sovereignty for the support of the government and
all public needs.
Essential elements of a tax
1. Enforced contribution
2. Generally payable in money
3. Proportionate in character
4. Levied on person, property, or the exercise of a right or privilege
5. Levied by the state which has jurisdiction over the subject or object of taxation
6. Levied by the lawmaking body of the state
7. Levied for public purpose or purposes
Classification of taxes
1. As to subject matter or object
a. Personal, poll or capitation – Community Tax
b. Property – Real Property Tax
c. Excise (Privilege Tax) – Income tax, donor’s tax, estate tax
2. As to who bears the burden
a. Direct – Income tax, donor’s tax, estate tax
b. Indirect – Value-added tax, and percentage tax
3. As to determination of amount
a. Specific – Excise tax on distilled spirits, cigar, cigarettes
b. Ad valorem – Real property tax
4. As to purpose
a. General, fiscal or revenue – Income tax, value-added tax
b. Special or regulatory – Sugar adjustment taxes
5. As to authority imposing the same
a. National – Internal revenue taxes
b. Municipal or local – Sand and gravel tax, occupation tax
6. As to graduation rate
a. Proportional – Value-added tax
b. Progressive – Income tax, estate tax, donor’s tax
c. Regressive – Tax rate of which decreases as the tax base increases