Princyples Theory and Basis of Taxation 1. Necessity Theory The power of taxation proceeds upon the theory that the existence of government is a necessity. It Is a power predicated upon necessity (Phil Guarantee Co, Inc, v. Commissioner (13 SCRA 775)]. The government cannot continue to perform of serving and protecting Its people without means to pay its expenses. For this reason, the state has the right to compel all its citizens and property within its limits to contribute. 2. Lifeblood Doctrine - Taxes are the lifeblood of the government without which it can neither exist nor endure. Upon taxation depends the State’s ability to serve the people for whose benefits taxes are collected. MANIFESTATION OF THE LIFEBLOOD DOCTRINE/THEORY: + No Estoppel against the Government Collection of taxes cannot be enjoined (stopped) by injunction Taxes could not be the subject of compensation or set-off AA valid tax may result in the destruction of the taxpayer's property Right to select objects (subjects) of taxation» :! 3. The Benefits Protection Theory - The basis of taxation is the reciprocal. duties of “protection and support” between the State and its inhabitants. The State collects taxes from the subjects of taxation in order that it may be able to perform the functions of government. The citizens, on the other hand, pay taxes in order that they may be secured in the enjoyment of the benefits of organized society. This theory spawned the Doctrine of Symbiotic Relationship which means, taxes are what we pay for a civilized society. DISTINCTIONS AMONG THE THREE (3) INHERENT POWERS OF THE STATE ceri E Emenee NATURE Power to enforce contributions Power to make and implement Power to take private property for to raise gov't funds. laws forthe general welfare. - public use with ust compensation, AUTHORITY Govemment only Goverment only PURPOSE ——_Forthe support ofthe Promotion of general welfare The taking of private property for government through regulation ~ public use. PERSONS Community or a class of Community or a class of On an individual as the owner of AFFECTED —_ individuals. individuals, personal property. ‘Applies to all persons, property Applies to all persons, property Only particular property is and excises that may be and excises that may be subject comprehended. subject thereto thereto. TYPE OF Property is wholesome and is Property is noxious or intended Property is wholesome and is PROPERTY devoted lo pubic use or for a noxious purpose and es devoted to public use or purpose Purpose. ‘such taken and destroyed.