TAXATION AND REVENUE

ADMINISTRATION
•History of Taxation
•Definition of Taxation
•Purpose and Importance
•Essential Characteristics
•Theory and Basis of Taxation
•Nature of power of taxation
•Aspect of Taxation
•Effects of Taxation
•Basic Principles of Taxation
•The Philippines Taxation System
•Kinds of Taxes
History
• During the reign of Egyptian Pharaohs
• Scribes as tax collectors
• In Greece
• A tax referred to as Eisphora was imposed
only in times of war
• In Athens
• A monthly tax called Metoikon was collected
to foreigners
History
• Earliest taxes in Rome
• Taxes known 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 an emergency measure
• Taxes on income or capital were a recent development
as a result of increasing government intervention in the
economy
History
• Philippines
Ancient Filipinos practice paying taxes for the
protection from their “datu”.
Definition of Taxation
Taxation is the act of laying a tax.
The process or means by which the
sovereign, through its law making
body raises revenue to defray the
necessary expenses of government.
Purpose and Importance
• The purpose of taxation on the
part of government is to provide
funds which to promote the
general welfare and protection of
its citizens, and to enable it to
finance its various activities
Definition of taxes
It is an enforced proportional
contribution from persons and property
levied by the law making body of the
state by virtue of its sovereignty for the
support of the government and all
public needs.
Essential Characteristics of Tax

(1) It is an enforced contribution

(2) It is generally payable in money
(3) It is proportionate in character
(4) It is levied on persons or property
(5) It is levied by the state which has
jurisdiction over the person or
property.
Essential Characteristics of Tax
(6) Itis levied by the law-making body of the
state.
(7). It is levied for public purposes.
Theory and Basis of Taxation
• (1).Thepower of taxation proceeds upon the
theory that the existence of government is
a necessity.
• (2) The basis of taxation is found in the
reciprocal duties of protection and support
between the state and its inhabitants.
Nature of Power of Taxation
• (1)It is inherent in sovereignty. The
power of taxation is inherent in
sovereignty being essential to the
existence of the government.
• (2) It is legislative in character. The
power to tax is legislative.
• (3) It is subject to constitutional and
inherent limitation.
Aspect of Taxation
(1) Imposition of the tax which is a legislative
in act.

(2) Collection of the tax levied which is

essential in character
Basic principles of a sound tax system

(1) Fiscal Adequacy

(2) Equality or theoretical justice
(3) Administrative feasibility
Effects of Taxation
• Personal Income Tax which is presumed to
fall entirely on the legal taxpayers
influences decisions to work, save, and
invest. These decisions affect other people.
• Corporate Income Tax may simply result to
lower corporate profits and dividends. It
may reduce their income of all owners of
property and businesses.
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
Taxation in the Philippines
• 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
Taxation in the Philippines
• Tax Reforms:
• Lower income tax rates to enhance the
competitiveness of the Philippines in the region
• Removal of areas which provide avenues for
tax avoidance and abuse
• Exemption of OFWs from payment of tax for
income earned outside the Philippines
• Simplification of the tax system which
encourages payments from tax payers including
those from the underground economy
Kinds of Taxes
• Income Tax
• Donor’s Tax
• Estate Tax
• Excise Tax
• Documentary Tax
• Expanded Withholding Tax
• Final Withholding Tax
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
Tax Avoidance
• It is the use by the taxpayer of legally
permissible means of method in order
to avoid or reduce tax liability. It is not
punishable by law.