Week2:

Principles of
Taxation
SANDRA HARO
Taxation
Taxation is a term for when a taxing authority, usually a
government, levies or imposes a financial obligation on
its citizens or residents

Purpose
1. Revenue Purpose
2. Regulatory Purpose
3. Compensatory Purpose
1. Nature, Scope, Classification,
and Essential Characteristics
NATURE

1. Inherent in Sovereignty
2. Legislative in Character
3. Public Purpose
4. Lifeblood of the Government
5. Subject to Constitutional and Inherent Limitations
SCOPE
a. Real properties
b. Personal properties.
c. Tangible properties
d. Intangible properties

4. Excise objects, such as:

a) Transaction-the act of conducting activities related
to any business or profession. It may involve selling,
servicing, leasing, borrowing, mortgaging or lending

b) Privilege-a benefit derived through gratuitous

transfer by Fact of death or donation. c) Right-a power,
faculty or demand inherent in one person and
incidental to another.
 Classification
1 2 3
As to Purpose: As to Subject Matter: As to Determination of
Amount:
1. Revenue of Fiscal 1. Personal, Poll, or
2. Regulatory, Special, or 1. Ad Valorem
Capitation
Sumptuary 2. Specific
2. Property
3. Compensatory 3. Excise
 Classification
4 5 6
As to who Bears the As to Scope: As to Graduation of Rate:
Burden:
1. National 1. Proportional or Flat Rate
1. Direct 2. Progressive of
2. Local
2. Indirect Graduated Rate
3. Regressive Rate
4. Digressive Rate
5. Mixed Tax
 Essential Characteristics
1. Enforced contribution. The imposition shall not be dependent upon the will of the taxpayer

2. Imposed by the legislative body. The Congress makes tax laws,

3. Proportionate in character. The "ability to pay principle" is the basic rule in colleting taxes. Those who eam

more? contribute to the government's coffer more than those with lesser earnings:

4.Payable in the form of money. Money is the preferred payment of taxes. If property is taken to satisfy tax liability, the property is sold through
public auction to satisfy the tax obligation

5. Imposed for the purpose of raising revenue. Taxes are the primary of government funds finance its expenditures and projects:

6. Used for a public purpose. Money is taken from the public so it can be returned to them in the form of public benefits:

7. Enforced on some persons, properties or rights. Objects of taxation are either tangible or intangible properties, including business transactions,

8. Commonly required to be paid at regular intervals. The dates for paying of taxes are fixed by the law to

comply with the principle of administrative feasibility; and

9. Imposed by the sovereign state within its jurisdiction. The enforcement of tax is subject to territorial

jurisdiction and international comity.

Distinguish Tax and
Other forms of
Exactions
1. Tax distinguish from
Toll
2. Tax distinguish from
Penalty
.

3. Tax distinguish from

Debt
.

4. Tax distinguish from

other Terms
 Distinguish Power of
Taxation, Police Power,
and Eminent Domain
Power of Taxation
The power of Taxation is the power to enforce
contributions to support the government, and other
inherent powers of the state
Police Power
The power to protect citizens and
provide for safety and welfare for
society.
Eminent Domain Power
The power to take private
property (with compensation) for
public use.
Theory and Basis
of Taxation
 Principles of a
Sound Tax System
 Fiscal Adequacy

The principle of fiscal adequacy states that the

sources of revenue of the government should be
sufficient tom eet the demand of public
expenditures regardless of business condition.
 Equality or Theoretical
Justice
This Principle states that the tax burden must be
proportionate to the taxpayers ability to pay.
 Administrative
Feasibility
Tax laws must be convenient, just, uniform, and
effective in their administration.
 Current and Constitutional Limitations on
Current limitations. Taxation
it is the natural restrictions to safeguard and ensure that the power of taxation
shall be exercised by the government only for the betterment

of the people whose interest should be served, enhanced, and protected.

1. Taxes maybe levied only for public purposes

2- Being inherently legislative, taxation may not be delegated

3. Tax power is limited to teritorial jurisdiction of the state.

4. Taxation is subject to international comity, and

5. Government entities are generally tax-exempt.

 Legislation of Tax Laws
1. Concurrence by a majority of all members of the Congress for a passage of a
law granting tax exemptions.

2. All appropriation, revenue or tariff bills chew originate exclusively from the
House of Representatives.

3. The Senate may propose or concur with amendments.

4. The committee will harmonize the bill introduced by the house of

Representatives and a parallel will introduced in the states.

5. President's approval. The harmonized bill signed by the president becomes a

law.
 Legislation of Tax Laws
6 .President's veto The president has the power to veto any particular
items or items in an appropriation revenue, or tariff bill, but the neto
shall not affect the item or items to which he does not object.

7. The congress may authorize the president to fix tariff rates, imports
& export quotas, tonnage and wharfage dues and other dutier or
imposts.

8. Congress may provide for incentives including tax deductions to

Encourage private participation in programs of basic applied
scientific search.
 Stages of Taxation
LEVY
- imposition of taxes
involves the passage of tax
laws or ordinances through
the legislative Refers to
taxation or the taxl policy
of the sovereign state.
ASSESSMENT
- involves the act of
administration and
Implementation of the tax
laws by executive through
its administrative agencies
such as the BIR.
PAYMENT OF TAX
- is a process
involving the act of
compliance by the
taxpayer in contributing
his chare to defray the
expences of the
government.
Requisites of a Valid Tax
a. The tax must be for a public purpose,
b. The role of taxation should be uniform.
c. The assessment and collection should be in harmony with
the due process clause
d. The person or property taxed is w/ in the jurisdiction of
the taxing authority; and
e. The tax must not infringe on the inherent and
constitutional limitations of the power of taxation.
1. Income Tax
2. Corporate Tax
3. Capital Gains
4. Property Tax
5. Inheritance
6. Sales Tax
General Concepts
in Taxation
1. Prospective application on Tax Laws
2. Imprescriptibility of Taxes
3. Double Taxation
4. Escape from Taxation
5. Exemption from Taxation
6. Equitable Recoupment
7. Sell-off Taxes
8. Taxpayer Suit
9. Compromises
10. Power to Destroy
11. Status of Taxation
Construction and Interpretation of Tax Laws Rules
and Regulations
a. Tax Statue must be enforced as written
2. Imposition of Tax Burdens is not Presumed
3. Doubts should be resolved liberally in favor of the
Taxpayer.
4. Tax exemptions are strictly constructed against the
taxpayer.
5. Tax Laws are applied prospectively
6. Tax Laws prevail over civil laws
 Taxing Authority

a. Tax Statue must be enforced as written

2. Imposition of Tax Burdens is not Presumed
3. Doubts should be resolved liberally in favor of the
Taxpayer.
4. Tax exemptions are strictly constructed against the
taxpayer.
5. Tax Laws are applied prospectively
6. Tax Laws prevail over civil laws
THANK
YOU