I.

PURPOSE OF TAXATION
Primary purpose – to raise revenues for the government
Secondary purpose – to attain social and economic ends.
II. CHARACTERISTICS OF TAXATION
1. Inherent Power
2. Essentially a legislative function
3. Subject to inherent and constitutional limitations
4. For public purpose
5. The strongest of all inherent powers of the government
6. Subject to international Comity
7. Generally payable in money
8. Territorial in scope
III. What are taxes?
Are enforced proportional contributions from persons and property, levied by the law-
making body of the state by virtue of its sovereignty for the support of the government and
all public needs.
IV. ESSENTIAL CHARACTERISTICS OF TAXES
A. Compulsory contribution
B. Generally payable in money
C. Imposed for public purpose
D. Levied by the law-making body of the State
E. Levied within the legal and territorial jurisdiction of the State.
F. Assessed in accordance with reasonable rule of apportionment.
V. THEORY OF TAXATION
A. Necessity theory – the existence of the government is a necessity and to pay for the
expenses of governance, there must be enforced contributions from persons and
properties under the territorial jurisdiction of the taxing state.
B. Lifeblood doctrine – without taxes, no government can exist.
VI. MANIFESTATION OF THE LIFEBLOOD DOCTRINE THEORY:
A. No estoppel against the government
B. Collection of Taxes cannot be enjoined by injunction
C. Taxes could not be the subject of compensation or set-off
D. A valid tax may result in the destruction of taxpayer’s property.
E. Right to select objects of taxation.
VII. BASIS OF TAXATION:
The government shall render service to the people and the people shall show support to the
government by paying the right amount of taxes.

VIII. STAGES/ASPECTS OF TAXATION

A. LEVYING OR IMPOSITION - this is the process of passing of tax laws or ordinances
through the legislature.
B. ASSESSMENT AND COLLECTION - this process involves the act of administration and
implementation of tax laws by the executive through its administrative agencies such as the Bureau
of Internal Revenue and Bureau of Customs.
C. PAYMENT OF TAXES - this process involves the act of compliance by the taxpayer in
contributing his share to pay the expenses of the government.

IX. PRINCIPLES OF SOUND TAX SYSTEM

 A. FISCAL ADEQUACY - sources of government revenues must be sufficient to meet
government expenditures and other public needs.
B. ADMINISTRATIVE FEASIBILITY - tax laws must be capable of convenient, just and
effective administration - free from confusion and uncertainty.
C. THEORETICAL JUSTICE - a good sound tax system must be based on the taxpayer’s ability
to pay the tax.