1.

Define Taxation
Taxation is a power to raise & accumulate revenue from its inhabitants
to pay the necessary expenses of the government.
2. Why is taxation important?
- It is important for the continuous existence of a nation
- Exercised to raise revenue for the very existence of the govt
- Without taxation, other inherent powers would be paralyzed

3. What are the bases of exercise of tax power?

a. Necessity - Right to compel all its citizens to contribute money

- A necessary burden to preserve the state’s sovereignty

- Lifeblood or bread & butter of govt

b. Reciprocal Duties

- Benefits received principle

- Symbiotic relationship: indispensable partnership between the

people and the government

4. Explain briefly the three main purposes in exercising taxation power

1. Revenue Purpose

- To raise revenue by collecting funds and property

2. Regulatory Purpose

- Sumptuary: secondary objective of imposing tax - Regulate

inflation, achieve economic and social stability, and a key instrument
for social control

- Used as a tool and weapon international relations

- Duties:

a. Discriminatory duty - to offset foreign discrimination

against our local commerce

b. Countervailing duty - imposed to offset any foreign

subsidy granted to imported goods to the prejudice of
local industries
 c. Marking duty - additional duty tax with improper
classifications

d. Dumping duty - imposed on imported goods with

lower prices compared to their fair market values

3. Compensatory Purpose

- A tax may be used to make up for the benefit received

- Imposed for the equitable distribution of wealth and income

- Higher taxes are collected from those who earn more

5. Explain briefly the nature of police, eminent domain and taxation

powers of the state.
1. Police Power
- To legislate for the protection of health, welfare & morals of the
community
- Guard against abuses
- Restricted by due process clause
- cannot be deprived of life, liberty & property
- May be exercised through taxation
2. Eminent Domain
- To take private property for public purpose
- Property may not be taken without just compensation: full monetary
equivalent of the property Taken
3. Taxation
a. Inherent power of sovereignty
- Automatically possesses the power to collect taxes
- Can enforce without specific provision in the constitution

- Only national govt exercise inherent power of taxation

(not LGUs)

b. Essentially a legislative function

- Congress: to enact laws & ordinances; to impose &

collect taxes (cannot be exercised by executive & juridical
branch)

- Power to tax is only delegated to legislative branch of

LGUs

- Non-legislative body has a power on ministerial &

advisory (administrative in nature)
c. For Public Purposes

- It must be for the common good of the people

- No individual or private person shall be benefited d.

Territorial in Operation

- Must observe tax situs: place of taxation

- Except for privity of relationship: the right to exercise its

taxing powers over citizens outside its territory

- Observes international comity: recognition, agreement &

interaction by one nation to the laws of another

e. Tax Exemption of Government.