TAXATION DURING THE

COMMONWEALTH PERIOD
 ⬗ During the commonwealth, new measures
and legislation were adopted to make the
taxation system appear more egalitarian. In
1936, income tax rates were raised, with a
surtax on individual net incomes above
10,000 pesos. Corporations' income tax
rates were also raised.

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  The cedula tax was eliminated in
1937, which appeared to be a
progressive development;
nevertheless, a residency tax was
placed on every person above the
age of 18 as well as every
corporation in 1940.

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The National Internal Revenue Code, drafted by
the Commonwealth government in 1939, made
significant improvements to the new tax
structure, as follows:
 ⬗ 1. The normal tax of tree percent and the
surtax on income was replaced by a single
tax at a progressive rate.
⬗ 2. Personal exemption we're reduced.
⬗ 3. Corporation income tax was slightly
increased by introducing taxes on inherited
estates or gifts donated in the name of dead
persons.

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  4. The cumulative sales tax was replaced by a
single turnover tax of 10% on luxuries.
 5. Taxes on liquors, cigarettes, forestry products,
and mining were increased.
 6. Dividends were made taxable.

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 introduced tax
structure

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  The new tax structure was an improvement over the
previous American system, but it was still inequitable. The
poorer classes continued to bear the brunt of taxation,
while the higher classes, the landed elite, and those in
political positions were able to manipulate the situation to
their advantage.

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 Agriculture was still taxed at a low rate to
encourage expansion, but there was little incentive
for industrial investment to take root and thrive.

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Finally, a common character of taxation during the
Americans occupation in the Philippines was not used
to diversify the economic or direct economic
development as some sectors still carried the
disproportionate share of the tax burden.
As World War 2 reached the Philippine
shores, economic activity was put to a stop
and the Philippines bowed to a new set of
administrators, the Japanese.
During World War II, the Japanese military
administration in the Philippines
immediately continued the tax collection
system. Introduced under the
Commonwealth, however objects belonging
to the Japanese armed forces were
exempted.
Amusements, manufacturing,
professions, and business licenses were
the principal sources of taxation as
foreign trade declined. Because tax
collection was difficult during the war,
the government relied on additional
revenue from the National Sweepstakes
and the sale of government bonds.
Foreign trade fell and the main sources of
taxation came from amusements, manufactures,
professions, and business licenses. As the war
ranged tax collection was a difficult task and
additional incomes of the government were
derived from the sales of the National
Sweepstakes and sale of government bonds.
 THANK YOU!!!

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