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Basic Principles - What You Need To Know
Basic Principles - What You Need To Know
among those who in some measure are privileged to enjoy its benefits and must bear its burden.
Tax is the enforced proportional contribution from persons and the properties levied by the State by virtue of its
sovereignty for the support of government and for public needs.
NATURE:
1. It is inherent in sovereignty - it is essential to the existence of every government.
2. It is legislative in character - the power to tax is pecuniary and exclusively vested to the Congress.
3. It is subject to limitations - inherent and constitutional.
SCOPE:
1. The levy of tax is essentially for public purpose.
2. The subjects or objects to be taxed may be persons (natural or juridical) or property (real or personal, tangible or
intangible. The following may be included as subject/object: business, transaction, rights or privileges.
3. The amount and rate of tax, which shall be uniform and equitable.
4. The manner and mode of enforcement and collection
5. The situs of taxation - may be exercised only within the territorial jurisdiction of the taxing authority
CHARACTERISTICS:
1. It is an enforced contribution - tax is not voluntary and its imposition is in no way dependent upon the will or
assent of the person being taxed.
2. It is proportionate in character - the share of the taxpayer on the public burden is essentially based on one's ability
to pay.
3. It is levied by the law-making body of the state - the power to tax is vested unto the Congress i.e. the House of
Representatives (from which the tax bill is introduced) and the Senate. The Congress determines who to tax,
what to tax and how the tax shall be collected. Take note that they are NOT involved in the collection thereof.
4. It is levied for public purpose or purposes - taxes are spent to support government i.e. they are not supposed to
be used for private purpose.
5. It is generally payable in money - the government, in the exercise of its civil remedy in collecting the tax due may,
by distraint of personal property or by levy of real property, take the same to satisfy the tax liability if the taxpayer
has no money
6. It is levied on persons and property by the State which has jurisdiction.
LIMITATIONS
Inherent Limitations - (by its nature)
1. Public purpose - for general welfare. (Para sa madlang people lang gagastusin ang perang nakulimbat este
nakolekta)
2. Non-delegability of legislative taxing power - the Congress cannot delegate the "power to tax"to others. (Inutos na
nga sa kanila ng Constitution tapos iuutos pa nila sa iba)
3. Exemption of Government Agencies/Instrumentalities exercising essential governmental function. (Bawal singilin
ang kakampi)
4. International comity - the property of a foreign state or government may not be taxed by another. (Kasama na jan
ung mga ambassador at iba pang diplomatik).
5. Situs or territoriality - As a rule, the taxing power cannot go beyond the territorial limit of the taxing authority. Situs
of taxation is the State or country which has jurisdiction to tax a person, property or interest.
BASIS OF TAXATION
1. Principle of Necessity - without money, the government cannot pay its expenses and therefore cannot exist.
2. Reciprocal Duties - (Benefits-Received or Compensation Theory) In return for the contribution of the taxpayer, he
receives the general advantages and protection which the government affords the taxpayer and his property.
PURPOSES OF TAXATION
1. Primary Purpose (Revenue/Fiscal) - to raise revenues for the support of the government.
2. Secondary Purpose (Non-revenue) - to regulate
Exemption:
In establishing tax exemptions, it should be borne in mind that taxation is the rule, exemption is the exception.
Accordingly, statutes granting tax exemptions must be construed in stricti ssimi juris against the taxpayer and liberally in
favor of the taxing authority. One who claims an exemption from tax payments rests the burden of justifying the exemption
by words too plain to be mistaken and too categorical to be misinterpreted.
1. Police Power
2. Eminent Domain
3. Taxation