LAW C503 Law on Income Taxation

Week 2: General Principles of Taxation

 Taxation
- process or means by which the sovereign, through its law-making body, raises income to
defray the necessary expenses of the government.
- it is a method of apportioning the cost of government among those who in some measures
are privileged to enjoy its benefits and must, therefore, bear it burdens.

ELEMENTS OF TAXATION
1. Enforced proportional contribution from persons and properties. Imposition is in not
dependent upon the will or assent (n. expression of approval or agreement) of the
person taxed. Not contractual, either expressed or implied, but positive acts of
government.
2. Imposed by the State by virtue of sovereignty.
3. Levied (v. impose a tax, fee, or fine) for the support of the government.

PURPOSE OF TAXATION
1. Revenue-raising – the primary purpose is to generate funds for the State to finance the
needs of the citizenry and advance the common weal (n. that which is best for someone
or something).
2. Non-revenue/special or Regulatory – Taxes may be levied with a regulatory purpose to
provide means for the rehabilitation and stabilization of a threatened industry which is
affected by public interest as to be within the police power of the state.

NATURE OF THE POWER OF TAXATION

1. Inherent in Sovereignty
- it is a power emanating from necessity because it imposes a necessary burden to
preserve the State’s sovereignty
2. A legislative function
- power to tax is exclusively legislative and cannot be exercised by the executive or
judicial branch of the government.
- only Congress, the national legislative body, can impose taxes.
- levy of tax may be made by local legislative body subject to such limitations as
provided by law.