CHEAT CODE FOR THE DISCUSSION (MARCH 25, 2023)

GENERAL PRINCIPLES AND LIMITATIONS OF TAXATION POWER

DEFINITION OF TAXATION
It refers to an inherent power of the Government which raises revenue to defray the
expenses of the government.

NATURE OF THE POWER OF TAXATION

It is an attribute of sovereignty; legislative in character; delegation to the President; and
subject to constitutional and inherent limitations

STAGES OF TAXATION
Levy; assessment; and collection

LIFEBLOOD THEORY
Without revenue, the Government will not survive (being one of the elements of State),
resulting to detriment to society. Without taxes, the Government would be paralyzed
for lack of motive power to activate and operate it.

NECESSITY THEORY
The exercise of the power to tax emanates from necessity, because without taxes,
government cannot fulfill its mandate of promoting the general welfare and well-being
of the people.

BENEFITS-PROTECTION THEORY
The government is expected to respond in the form of tangible and intangible benefits
intended to improve the lives of the people.

DEFINITION OF “TAXES”; TAX vs. DEBT

Taxes are enforced proportional contributions.

CHARACTERISTICS OF SOUND TAX SYSTEM

Fiscal Adequacy; theoretical justice; and administrative feasibility

DOUBLE TAXATION; TAX EVASION vs. TAX AVOIDANCE

INHERENT LIMITATIONS
The levy must be for public purpose; non-delegation of the legislative power to tax;
exemption from taxation of government entities; international comity; and territorial
jurisdiction

CONSTITUTIONAL LIMITATIONS
Substantially from Bill of Rights (Due Process; Tax Exemption for religious, charitable,
and educational purposes)

Assignment:
Study the Kinds of Taxpayers; Gross Income; and Accounting Methods and Periods