Taxation

WHAT IS TAXATION?
● It is the inherent power by which the sovereign state imposes financial burden upon
persons and property as a means of raising revenues in order to defray the necessary
expenses of the government
● Taxation is the imposition of financial charges or other levies, upon a taxpayer (an
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individual or legal entity) by a state such that failure to pay is punishable by law.
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● It is a mode by which government make exactions for revenue in order to support their
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existence and carry out their legitimate objectives.
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● It is the most pervasive and the strongest of all the powers of the government.
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● Taxes are the lifeblood of the government, without which, it cannot subsist.

HISTORY OF TAXATION
● The first known system of taxation was in Ancient Egypt around 3000 BC -2800 BC in the
first dynasty of the Old Kingdom.
● In Biblical times, tax is already prevalent. According to Genesis 47:24: “But when the crop
comes in, give a fifth of it to Pharaoh. The other four-fifths you may keep as seed for the
fields and as food for yourselves and yo,ur households and your children”

HISTORY OF TAXATION
● Earliest taxes in Rome are called as portoria were customs duties on imports and exports
● Augustus Caesar introduced the inheritance tax to provide retirement funds for the
military. The tax was five percent on all inheritances except gifts to children and spouses.
● In England, taxes were first used as emergency measures.

HISTORY OF TAXATION IN THE PHILIPPINES

During the Spanish Period, new incomegenerating means were introduced by the government
such as the :
. Manila-Acapulco Galleon Trade
. Polo Y Servicio (Forced Labor)
. Bandala
. Encomienda System
. Tribute/Tributo

History of Taxation in the Philippines

● Manila-Acapulco Galleon Trade was the main source of income for the colony during its
early years.
The Galleon trade brought silver from Nueva Castilla and silk from China by way of Manila.
● Polo Y Servicio is the forced labor for 40 days, of men ranging from 16 to 60 years of age
who were obligated to give personal services to community projects. One could be
exempted from the polo by paying a fee called falla (which was worth one and a half real).
● Bandala is one of the taxes collected from the Filipinos. It comes from the Tagalog word
mandala, which is a round stock of rice stalks to be threshed.

In the 19th century, the "cedula" served as an identificatiion card that had to be carried at all
times. A person who could not present his or her cedula to a guardia civil could then be
detained for being "indocumentado". Andres Bonifacio and other Katipuneros tore their cedulas
in . August 1896, signaling the start of the Philippine Revolution.

THE DEVELOPMENT OF THE COMMUNITY TAX

The cedula was imposed by the Americans on January 1, 1940, when Commonwealth Act No.
465 went into effect, mandating the imposition of a base residence tax of fifty centavos and an
additional tax of one peso based on factors such as income and real estate holdings.
The payment of this tax would merit the issue of a residence certificate. Corporations were also
subject to residence tax.

WHAT IS A "CEDULA"?
It is Also known as a "residence certificate". It is a legal identity document in the Philippines.
Issued by cities and municipalities to all persons that have reached the age of maturity and
upon payment of a community tax, it is considered as a primary form of identification in the
Philippines and is one of the closest single documents the Philippines has to a national system
of identification, akin to a driver's license and a passport.

THE FOUR R'S OF TAXATION

Taxation has four main purposes or effects:
. Revenue
. Redistribution
. Repricing
. Representation

THE FOUR R'S OF TAXATION

. Revenue The taxes raise money to spend on armies, roads, schools and hospitals, and on
more indirect government functions like market regulation or legal systems.
. Redistribution This refers to the transferring of wealth from the richer sections of society
to poorer sections.