CHAPTER 1

PRINCIPLES OF TAXATION
1. TAXATION DEFINED
 Taxation is powered inherent in every sovereign state to
impose a change or burden upon persons, properties or
rights, to raise revenues, for the use and support of the
government, and enable it to discharge its appropriate
functions.
2. NATURE AND SCOPE OF
TAXATION
 As to nature, taxation is an inherent power of the state,
and essentially a legislative power.
 As to scope, in the absence of limitations prescribed by
the fundamental law or constitution, the power of taxation
is unlimited and comprehensive, and if there is any
limitation at all, is the sense of responsibility of the
members of the legislature of their constituents.
3. TAXATION DISTINGUISHED
FROM EMINENT DOMAIN
 This is payment of money by a taxpayer in taxation,
while there is taking of property by the government in
eminent domain.
4. TAXATION DISTINGUISHED
FROM POLICE POWER
 Taxation is for purposes of raising revenues, while police
power is for purposes of regulation.
5. LIMITATIONS ON POWER OF TAXATION
INHERENT LIMITATIONS:
1. The tax must be leveled for a public purpose.
2. The power of taxation cannot be delegated.
3. The rule against direct double taxation.
4. Government instrumentalities and agencies through which
government exercise sovereign powers are exempt from tax, in
the absence of a clear proof of a contrary intent in the law.
5. The power of taxation is limited to the territorial jurisdiction of
the taxing state.
6. The tax laws cannot apply to property of foreign governments.
 CONSTITUTIONAL LIMITATIONS
1. No law impairing the obligations of contracts will be
passed.
2. No person can be imprisoned for debt or non-payment of
a poll tax.
3. The rule of taxation must be uniform and equitable.
4. Charitable institutions, churches, parsonages, or
convents appurtenant thereto, mosques, and non-profit
cemeteries and all kinds of lands. Buildings, and
improvements actually, directly or exclusively used for
religious or charitable purposes, will exempt from tax.
6. BASIC PRINCIPLES OF A SOUND
TAX SYSTEM
 Fiscal adequacy - The sources of revenues, as whole, must
provide enough funds to meet expanding expenditures of the
government.
 Theoretical justice - Taxes must be based on the taxpayer’s ability
to pay.
 Administrative feasibility – The tax must be clear to the taxpayer,
not unduly burdensome and discouraging to business convenient as
to time and manner of payment, and capable of enforcement by
competent public officials.
7. TAX DEFINED
 A tax is forced burden, charge, exaction, imposition or
contribution assessed in accordance with some reasonable
rule of appointment by authority of sovereign state, upon
the person or property, or rights exercise, within its
jurisdiction, provide public revenues for the support of
government, the administration of the law, or the payment
of public expenses.
8. ESSENTIAL
CHARACTERISTICS OF A TAX
 It is forced contribution
 It is exacted pursuant to legislative authority in the
exercise of the taxing power
 It is proportionate in the character
 It is payable in money
 It is imposed for the purpose of raising revenue
 It is to be used for a public purpose
9. TAX DISTINGUISHED FROM
LICENSE FEE
 Taxes are imposed under the taxing power of the state
for purposes of revenue, while license fees are levied
under the police power of the sate.
 Taxes are generally unlimited as to amount, while license
fees must not unreasonably exceed of issuing the license
and of supervision unless the business or occupation being
regulated is non-useful.
10. TAX DISTINGUISHED
FROM SPECIAL ASSESSMENT
 A special assessment is a contribution of a person for the
construction of a public improvement, while a tax is a
contribution of a taxpayer for the support of the
government.
11. CLASSIFICATION OF TAXES
 AS TO SUBJECT MATTER
1. Personal, capital or poll tax
2. Personal tax
3. Excise tax

 AS TO WHO BEARS THE BURDEN

1. Direct tax
2. Indirect tax
 AS TO DETERMINATION OF THE AMOUNT
1. Specific tax
2. Ad valorem tax

 AS TO PURPOSE
1. General tax
2. Local tax
 AS TO SCOPE
1. National tax
2. Local tax

 AS TO PROPORTIONSLITY
1. Progressive
2. Regressive
3. Proportional
CLASSIFICATION OF THE
PHILIPPINE INCOME TAX
 A national tax
 An excise tax
 A direct tax
 A general tax
 An ad valorem tax
SOURCE OF TAX JURISPRUDENCE

 Special laws, as they give preferential tax treatment to certain

taxpayers, under certain condition
 Revenue regulations
 Revenue circulations
 Rulings of the Bureau of Internal Revenue
 Opinions of the Secretary of Justice
 Decisions of the Supreme Court of the Philippines
 Decisions of the Court of Appeals
 Decisions of the Court of Tax Appeals
 Decisions of inferior courts
 THANK YOU!!!
mwaah

PREPARED BY:
MARTIR, RYAN JESTER BARRAMEDA
A.K.A “JESTHURRR”