TAXATION : A SOURCE OF

GOVERNMENT REVENUE

Alfred Batocong MaPhilo

 Purposes Taxation
• To raise revenues for public
needs so that persons can
live in a civilized society
• The government increase
taxes in order to stabilize
prices and stimulate greater
production.
 ECONOMIC IMPACT OF
TAXES

REDUCE AFFECTS THE

INCOME OF ALLOCATION CONSUMER
INDIVIDUALS OF BUYING &
AND PRODUCTIVE SAVING HABITS
BUSINESSES RESOURCES
 • Sales fall = Less production =
RESOURCE Unemployment
ALLOCATION • Productive resources will be allocated
to another industry

• Sin tax (high tax) = Raise revenue &

BEHAVIOR reduce consumption
CHANGE • Examples: Tobacco and Liquor

• Taxes can HINDER productivity and

PRODUCTIVITY economic growth
& GROWTH • “Why should I aim to earn more when
additional income will be paid out?
 CRITERIA FOR TAXES TO BE
EFFECTIVE
• “Fairness”
EQUITY • Tax Loopholes – Oversights of the
tax law

• Written : Both taxpayer & tax

SIMPLICITY collector should understand

• Easy to administer
EFFICIENCY • Successful as a revenue-
generating device
 PRINCIPLES OF TAXATION

• Those who benefit from the gov’t

services should be the ones to pay for
them
• People should pay taxes in proportion
BENEFIT to the amount of services or benefits
they receive
PRINCIPLE • Ex: Gasoline taxes
• Limitations: (a) Gov’t benefits – people
who can least afford it (Housing)
• (b)Gov’t benefits are hard to measure
 PRINCIPLES OF TAXATION

• People should be taxed accdg to

their ability to pay regardless of
the benefits they receive
• Factors: (1) Recognizes that
ABILITY TO societies are not always able to
PAY measure the benefits derive from
the govt
PRINCIPLE • (2) Assumes that persons w/
higher incomes suffer less
discomfort paying taxes than
persons with lower incomes
 GENERAL TYPES OF TAXES
• Imposes THE SAME % rate of taxation on
PROPORTIONAL everyone regardless of income
• AVERAGE TAX RATE

• Imposes HIGHER % rate of taxation on

persons w/ high income than on those w/
PROGRESSIVE low incomes
• MARGINAL TAX RATE

• Imposes a HIGHER % rate of taxation on

REGRESSIVE low incomes than on high incomes
 Taxation in the Philippines
• The legislative branch enacts laws to
continually revitalize the taxation policy of
the country
• BIR (Bureau of Internal Revenue)
– Mandated to comprehend the assessment
and collection of all national internal revenue
taxes, fees and charges so as to promote a
sustainable economic growth
 REPUBLIC ACT No. 8424
• Comprehensive Tax Reform Act of
1997
– Tax Payer: any person subject to tax
whose sources of income is derived
from within the Philippines
– TIN (Taxpayer Identification Number) is
required for any individual taxpayer
 REPUBLIC ACT No. 10963
• Tax Reform for Acceleration and
Inclusion (TRAIN) Act
• Initial package of the Comprehensive
Tax Reform Program (CTRP)
• TRAIN ACT contains Revisions to
the National Internal Revenue Code
of 1997
• Signed by Pres. Duterte
• December 19, 2017
 Taxation in the Philippines
• TRAIN ACT contains
a. Revisions to the National Internal
Revenue Code of 1997
b. Changes in taxation concerning
1. Personal Income tax 5. Documentary
2. Estate Tax Stamp Tax
3. Donor Tax 6. Excise Tax
4. Value Added Tax
 Taxation in the Philippines
• Taxes are collected within a
particular period of time know as
taxable year
• This is the calendar year or the fiscal
year that covers an accounting period
of 12 months ending on the last day of
any month other that December.
DIFFERENT TYPES
OF TAXATION
 UNLOCKING OF TERMS

INDIVIDUAL • Tax on people’s earnings

INCOME TAX

CORPORATE • Tax a company pays on its profits

INCOME TAX

• Tax on the manufacture or sale of

EXCISE TAX certain items (gasoline, liquor)
 UNLOCKING OF TERMS

ESTATE • Tax the government levies on the

transfer of property when a
TAX person dies

• Tax on donations of money or

GIFT TAX wealth & is paid by the person
who makes the gift

CUSTOM • A charged levied on goods

brought in from other countries
DUTIES
 UNLOCKING OF TERMS

• Tax levied on
SALES TAX consumer purchases
of nearly all products

• Tax on real property and tangible & intangible

personal property
• Real property – real estate, buildings &
PROPERTY anything permanently attached to land or
buildings
TAX • Tangible – Furniture, automobiles, farm
animals (not permanently attached
• Intangible – stock, bond, patent, check
 UNLOCKING OF TERMS

• Tax placed on the value that

manufacturers add at each
stage of production
VALUE • Similar to sales tax
• Advantage: Hard to avoid
ADDED because the tax collector
TAX levies it on the total amount
of sales less the cost of input
• Disadvantage – Tends to be
INVISIBLE to the consumers
 Kinds of taxes
• Value-added Tax (VAT)
– Tax imposed and collected on every sale, barter,
exchange or transaction deemed sale of taxable
goods, properties, lease of goods, services or
properties in the course of trade as they pass along
the production and distribution chain
• Capital Gains Tax
– Tax imposed on the gains presumed to have been
realized by the seller for the sale, exchange or other
disposition of real property located in the Philippines,
classified as capital assets
 Kinds of taxes
• Documentary Tax
– Tax on documents, instruments, loan
agreements and papers, agreements
evidencing the acceptance, assignments, sale
or transfer of an obligation, rights or property
incident thereto
 Tax Evasion
• When there is fraud through pretension
and the use of other illegal devices to
lessen one’s taxes, there is tax evasion
– Under-declaration of income
– Non-declaration of income and other items
subject to tax
– Under-appraisal of goods subject to tariff
– Over-declaration of deductions