Chapter 1 – General Principles of Taxation

Definition
Taxation is the process by which the country, through its lawmaking body,
raises income to provide funds for necessary expenses of the government.

Purpose of taxation

Purpose of taxation can be classified into primary and secondary, to wit:

1. Primary Purpose

To provide funds or property with which to promote the general welfare

and protection of its citizen and to enable to finance its multifarious activities.

2. Secondary Purposes

a. To strengthen anemic enterprises by giving tax exemptions;

b. To protect local industries against foreign competition through
imposition of high customs duties on imported goods;
c. To reduce inequalities in wealth and income by imposing progressively
higher tax rates; and
d. To prevent inflation by increasing taxes or ward off depression by
decreasing them.

Scope of taxation

The power of taxation is unlimited, comprehensive, plenary, and supreme,

the principal check upon its abuse resisting in the responsibility of the members
of the legislature to their constituents. The legislature is free to select the subjects
or objects to be taxed. They may be person, whether natural of judicial; property,
whether real or personal, tangible or intangible; businesses, transactions, rights,
or privileges.