INTRODUCTIN TO INCOME TAXATION

Definition of Taxation

Taxation is a State power, a legislative power, and a mode of government cost distribution.

- It is as inherent power of the state to enforce a proportional contribution from its

subject for public purpose.

- It is a process of levying taxes by the legislative of the State to enforce proportional

contribution from its subjects for public purpose

- It is a mode by which the State allocates its cost or burden to its subjects who
benefited by its spending.

Theories of Taxation

1. Benefit received theory

-presupposes that the more benefits one receives from the government, the more taxes he
should pay.

2. Ability to pay theory

 -presupposes that taxation should also consider taxpayer’s ability to pay. Taxpayers
should be required to contribute based on their relative capacity to sacrifice for the support of the
government

The lifeblood Doctrine

Taxes are essential and indispensable to the continued subsistence of the government.
Without taxes, the government would be paralyzed for lack of motive power to activate or
operate it.

The Inherent Powers of the State

1. Taxation power- the power of the State to enforce proportional contribution from its
subjects to sustain itself.

2. Police power- the general [owner of the State to enact laws to protect the well-being of
the people.

3. Eminent Domain- the power of the State to take private property for public use after the
paying just compensation.

Comparison of the three powers of the State

Similarities of the three powers of the State

1. They are all necessary attributes of the Sovereignty.

2. They are all inherent to the State.

 3. They are all legislative in nature.

4. They are all ways in which the State interferes with private rights and properties.

5. They all exist independently of the Constitution and are exercisable by the government
even without Constitutional grant. However, The Constitution may imposed conditions or
limit for the exercise.

6. They all presuppose an equivalent form of compensation received by the person affected
by the exercise of the power.

7. The exercise pf these powers by the Local Government Units may be limited by the
national legislative.

SCOPE of the Taxation Power