DOUBLE TAXATION

 
 
Double taxation in the strict sense v. double taxation in the broad sense
 
                     In its strict sense, referred to as direct duplicate taxation, double taxation means:
 
1.       taxing twice;
 
2.       by the same taxing authority;
 
3.       within the same jurisdiction or taxing district;
 
4.       for the same purpose;
 
5.       in the same year or taxing period;
 
6.       some of the property in the territory.
 
                     In its broad sense, referred to as indirect double taxation, double taxation is taxation
other than direct duplicate taxation. It extends to all cases in which there is a burden of
two or more impositions.
 
Constitutionality of double taxation
 
                     Unlike the United States Constitution, our Constitution does not prohibit double
taxation.
 
                     However, while it is not forbidden, it is something not favored. Such taxation should,
whenever possible, be avoided and prevented.
 
                     In addition, where there is direct double taxation, there may be a violation of the
constitutional precepts of equal protection and uniformity in taxation.
 
                     The argument against double taxation may not be invoked where one tax is imposed
by the State and the other is imposed by the city, it being widely recognized that there
is nothing inherently obnoxious in the requirement that license fees or taxes be exacted
with respect to the same occupation, calling, or activity by both the State and a political
subdivision thereof. And where the statute or ordinance in questions applies equally to
all persons, firms and corporations placed in a similar situation, there is no infringement
of the rule on equality. [City of Baguio v. De Leon, 25 SCRA 938]
 
Villanueva v. City of Iloilo, 265 SCRA 528
 
                     An ordinance imposing a municipal tax on tenement houses was challenged because
the owners already pay real estate taxes and also income taxes under the NIRC. The
 Supreme Court held that there was no double taxation. The same tax may be imposed
by the National Government as well as the local government. There is nothing inherently
obnoxious in the exaction of license fees or taxes with respect to the same occupation,
calling, or activity by both the State and a political subdivision thereof. Further, a license
tax may be levied upon a business or occupation although the land used in connection
therewith is subject to property tax.
 
                     In order to constitute double taxation in the objectionable or prohibited sense:
 
1.       the same property must be taxed twice when it should be taxed once;
 
2.       both taxes must be imposed on the same property or subject matter;
 
3.       for the same purpose;
 
4.       by the same State, Government, or taxing authority;
 
5.       within the same jurisdiction or taxing district;
 
6.       during the same taxing period; and
 
7.       of the same kind or character of tax.
 
                     At any rate, there is no constitutional prohibition against double taxation in the
Philippines. It is something not favored but is permissible, provided that some other
constitutional requirement is not thereby violated.