Principles Of Taxation

Mr. Clieford Perez, CPA, MBM

Constitutional Limitations
on the Power to Tax
Constitutional Limitations on the Power to Tax

1. Due process of Law

Art. III, Section 1. No person shall be deprived of
life, liberty, or property without due process of
law..

Read: CREBA v. Romulo, 614 SCRA 605

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Constitutional Limitations on the Power to Tax

2. Equal Protection of the Law

Art. III, Section 1. ..nor shall any person be denied the
equal protection of the laws.
The equal protection clause does not require the universal application of the laws on
all persons or things without distinction. This might in fact sometimes result in
unequal protection. What the clause requires is equality among equals as determined
according to a valid classification. By classification is meant the grouping of persons
or things similar to each other in certain particulars and different from all others in
these same particulars. ( Abakada Guro Party list v. Ermita, 469 SCRA 1 )
Question: What requisites must concur in order to become a classification valid?

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Constitutional Limitations on the Power to Tax
3. Uniformity of Taxation
Art. VI, SECTION 28. (1) The rule of taxation shall be uniform
and equitable.

Uniformity requires that all taxable property shall be alike

subjected to the tax, and this requirement is violated if particular
kinds, species of items of property are selected to bear the whole
burden of the tax, while others, which should be equally subject to
it, are left untaxed. (Vol. 37, Encyclopedia of Law and Procedure,
pp 735 – 736)
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Constitutional Limitations on the Power to Tax
4. Progressive Taxation
Art. VI, SECTION 28. (1) … The Congress shall evolve a
progressive system of taxation.

A progressive system of taxation means that tax laws shall place emphasis
on direct taxes rather than on indirect taxes, with ability to pay as the
principal criterion. Regressive tax rates refer to tax rates which decreases
as the tax base or bracket increases. Regressive tax rates should be
differentiated from a regressive system of taxation which exists when there
are more indirect taxes imposed than direct taxes. (Tabag & Garcia, 2019)

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Constitutional Limitations on the Power to Tax
5. Non-Impairment Clause

Art. III, SECTION 10. No law shall

be passed impairing the obligation of
contracts.

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Constitutional Limitations on the Power to Tax
6. Non-Imprisonment for Non-Payment of Poll Tax

Art. III, SECTION 20. No person

shall be imprisoned for debt or non-
payment of a poll tax.

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Constitutional Limitations on the Power to Tax
7. Bills to Originate from the House of Representative

Art. VI, SECTION 24. All appropriation,

revenue or tariff bills, bills authorizing increase
of the public debt, bills of local application, and
private bills shall originate exclusively in the
House of Representatives, but the Senate may
propose or concur with amendments.

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Constitutional Limitations on the Power to Tax
8. Veto Power of the President
▪ Art. VI, SECTION 27(1)… The President shall
communicate his veto of any bill to the House where it
originated within thirty days after the date of receipt thereof;
otherwise, it shall become a law as if he had signed it.
(2) The President shall have the power to veto any particular
item or items in an appropriation, revenue, or tariff bill, but
the veto shall not affect the item or items to which he does
not object.
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Constitutional Limitations on the Power to Tax
9. President’s Power to Tax
▪ Art. VI, SECTION 28(2). The Congress may, by law,
authorize the President to fix within specified limits, and
subject to such limitations and restrictions as it may impose,
tariff rates, import and export quotas, tonnage and wharfage
dues, and other duties or imposts within the framework of
the national development program of the Government.
▪ Note: Title XVI, Chapter 2, Sec. 1608 {Flexible Tariff} of the “Customs
Modernization and Tariff Act (GMTA)” or RA 10863

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Constitutional Limitations on the Power to Tax
10. Taxation and the Freedom of the Press

▪ Art. III, SECTION 4. No law

shall be passed abridging the freedom
of speech, of expression, or of the
press…

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Simple Exercises
Case to Ponder:
Filipino people are protesting against the imposition of
Value Added Tax (VAT). Some had been asking the court
to rule on their favor which is to declare the VAT
unconstitutional. IS A TAX LAW ADOPTING A
REGRESSIVE SYSTEM OF TAXATION VALID?

AND EXPLAIN WHY!?

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Fifth Topic is partially
completed.
Thank you!