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BA112 - INCOME
WELCOME
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ORIENTATION
>”Getting to Know you session”
>Discuss Course Syllables
>Discuss grading system
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Nature and Characteristics of
Taxation
1.Inherent Power
2.Essentially a legislative
function
3.Subject to inherent and
constitutional limitations
4.For public purpose
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TAXATION
Raymond A. Vasquez, CPA, MBA, LLB
What is Taxation?
>Taxation is a term for
when a taxing authority,
usually a government, levies or
imposes a financial obligation
on its citizens or residents.
Nature and Characteristics of
Taxation
5.The strongest of all the
inherent powers of the state.
6.Subject to international
treaty or comity
7.Generally payable in money
8. Territorial in scope
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Objectives Objectives
2.Secondary purpose:
1.Primary purpose a. Regulatory Purpose
❏ - To raise
> To implement the police
power of the State for the
revenue/funds to promotion of the general
defray the necessary welfare
expenses of the
government (also b. Compensatory purpose
called as Revenue or >Reduction of Social Inequality
Fiscal Purpose. >Economic Growth
>Protect local industries against
unfair competition

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The 3 Inherent Powers

of the State
❏ POWER TO TAX
- the act of levying a tax.
- the process or means by
which the sovereign
(independent state), through its
law-making body (legislative
branch), raises income to
defray the necessary expenses
of the government.
❏ POLICE POWER
- it is the power of the state
of promoting public welfare
by restraining and regulating
the use of liberty and
property
❏ EMINENT DOMAIN
- it is the power to take private
property for public purpose upon
payment of just compensation.

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Basic Principles of
❏ Administrative Feasibility
a Sound Tax
- Tax law must be sufficient
System to meet government
❏ Fiscal Adequacy expenditures and other
- the sources of public needs.
government revenue ❏ Theoretical Justice
must be sufficient to - A good tax system must be based
on the taxpayer’s ability to pay. This
meet government suggests that taxation must be
expenditures and other progressive conformably with the
public needs. constitutional mandate that
congress shall evolve a progressive
system of taxation.

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Limitations to the Power of
Taxation
➢ The power of taxation, is
however, subject to
constitutional and inherent
limitations.
A .Inherent
Limitations
➢ Taxation is bound in its exercise by
its own nature, essential
characteristics and purpose.
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4.Exemption. Government
agencies performing
governmental functions are
exempt from Taxation
5.Non-delegation. The power
to tax being legislative in
nature may not be delegated.
(subject to exceptions)
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4.Progressive scheme of taxation
5.Non-imprisonment for non-
payment of poll tax
6.Non-impairment of the
ogligations of contracts
7.Free-worship clause
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1.Purpose. Taxes may be levied
only for public purpose;
2.Territoriality. The State may tax
persons and properties under its
jurisdiction;
3.International Comity. the
property of a foreign State may
not be taxed by another.
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B.Costitutional Limitations on the
Taxing Power
Provisions that are said to be the
limitations on the Taxing Power
are as follows:
1.Observance of due process of law
2.Equal protection of law
3.Uniformity in taxation
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8.Exemption of charitable
institutions, churches,
parsonages, or convents
appurtenant thereto, mosques,
and non-profit cemeteries, and all
lands, buildings and
improvements actually, directly
and exclusively used for religious,
charitable or educational
purposes.
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9. Exemption from taxes of the
revenues and assets of non-profit,
non-stock educational institutions
including grants, endowments,
donations or contributions for
educational purposes.
10. Non-appropriation of public
funds or
property for the benefit of any
church, sect or
system of religion, etc.
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14.The President shall have the power
to veto any particular item(s) in an
appropriation, revenue or tariff, but the
veto shall not affect the item(s) to
which no objection has been made.
15.Non-impairment of the
jurisdiction of the Supreme Court to
review tax cases.
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Situs of Taxation
- literally means place of
taxation. The general rule is
that the taxing power cannot
go beyond the territorial
limits of the taxing authority.
Basically, the state where
the subject to be taxed has
a situs may rightfully levy
and collect the tax
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11.No money shall be paid out of
the Treasury except in pursuance
of an appropriation made by law.
12.Concurrence of a majority of
ALL MEMBERS OF CONGRESS
for the passage of a law granting
tax exemption
13.Non-diversification of tax
collections
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16.Appropriations, revenue or tariff
bills shall originate exclusively in the
House of Representatives but
the Senate may propose or concur
with amendments.
17.Each local government unit
shall exercise
the power to create its own
sources of revenue
and shall have a just share in the
national taxes.
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- THE END -
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