TAXATIO

N
History of Taxation
importance of taxation to the
taxpayers and to the government
Kinds and Characteristics of Taxes
Taxation System in the Philippines
 History
During the reign of Egyptian Pharaohs
Scribes as tax collectors
In Greece
A tax referred to as Eisphora was imposed only in times of
war
In Athens
A monthly tax called Metoikon was collected to foreigners
Ancient Greek Taxation
Taxation was used as an emergency power. Additional
resources gained from war were used to refund tax previously
collected from the people
 Earliest taxes in Rome
Taxes known as Portoria were customs duties on imports and
exports
Augustus Caesar introduced the inheritance tax to provide
retirement funds for the military. The tax was five percent on
all inheritances except gifts to children and spouses
In England
Taxes were first used as an emergency measure
Taxes on income or capital were a recent development as a
result of increasing government intervention in the economy
In the Philippines
The pre-colonial society, being communitarian, did not have
taxes
 In Modern Industrial Nations
The government designates a tax
base (such as income, property
holdings, or a given commodity)
A Tax Law is a body of rules passed
by the legislature by which the
government acquires a claim on tax
payers to convey, transfer and pay to
the public authority
 Taxation
The system of compulsory
contributions levied by a government
or other qualified body on people,
corporations and property in order to
fund public expenditures.
An inherent power of the state to
raise income and to demand enforced
contributions for public purposes.
 Purposes Taxation
to raise revenues for public needs so that
persons can live in a civilized society
The government increase taxes in order to
stabilize prices and stimulate greater
production.
An instrument of fiscal policy influences
the direction and structure of money
supply, investments, credits, production,
interest rate, inflation, prices and in
general, of the national economy
Characteristics of a sound Tax system

Fairness
Clarity and Certainty
Convenience
Efficiency
 Effects of Taxation
Personal Income Tax which is presumed to fall
entirely on the legal taxpayers influences
decisions to work, save, and invest. These
decisions affect other people.
Corporate Income Tax may simply result to lower
corporate profits and dividends. It may reduce
their income of all owners of property and
businesses. The company may move toward
raising the prices of their products
Taxation in the Philippines
The legislative branch enacts laws to
continually revitalize the taxation policy of
the country
BIR (Bureau of Internal Revenue)
Mandated to comprehend the assessment
and collection of all national internal revenue
taxes, fees and charges so as to promote a
sustainable economic growth
Taxation in the Philippines
Republic Act No. 8424
(Comprehensive Tax Reform Act of
1997)
Tax Payer: any person subject to tax
whose sources of income is derived
from within the Philippines
TIN (Taxpayer Identification Number) is
required for any individual taxpayer
Taxation in the Philippines
Tax Reforms:
Lower income tax rates to enhance the
competitiveness of the Philippines in the region
Removal of areas which provide avenues for tax
avoidance and abuse
Exemption of OFWs from payment of tax for
income earned outside the Philippines
Simplification of the tax system which encourages
payments from tax payers including those from
the underground economy
Taxation in the Philippines
Taxes are collected within a
particular period of time know as
taxable year
This is the calendar year or the fiscal
year that covers an accounting period
of 12 months ending on the last day of
any month other that December.
 Kinds of taxes
Income Tax
Tax on all yearly profits arising form property,
possessions, trades or offices
Tax on a persons income, emoluments and profits
Donors Tax
Tax imposed on donations inter-vivos or those made
between living persons to take effect during the
lifetime of the donor.
Estate Tax
Tax on the right of the deceased person to transmit
property at death
 Kinds of taxes
Value-added Tax (VAT)
Tax imposed and collected on every sale, barter,
exchange or transaction deemed sale of taxable
goods, properties, lease of goods, services or
properties in the course of trade as they pass along
the production and distribution chain
Capital Gains Tax
Tax imposed on the gains presumed to have been
realized by the seller for the sale, exchange or other
disposition of real property located in the Philippines,
classified as capital assets
 Kinds of taxes
Excise Tax
Tax applicable to specified goods
manufactured in the Philippines for domestic
sale or consumption
Specific tax: imposed on certain goods based on weight
or volume capacity or any other physical unit of
measurement (Specific tax = volume x tax rate)
Alcohol products, petroleum products, tobacco
products
Ad valorem tax: imposed on certain goods based on
selling price or other specified value of the goods
(Ad valorem tax = selling price x tax rate)
Mineral products, automobiles
 Kinds of taxes
Documentary Tax
Tax on documents, instruments, loan
agreements and papers, agreements
evidencing the acceptance, assignments, sale
or transfer of an obligation, rights or property
incident thereto
 Withholding tax
Expanded withholding tax:
A system of collecting taxes
whereby the taxes withheld on
certain income payments are
intended to equal or at least
approximate the tax due of the
payer on said income.
 Withholding tax
Final withholding tax:
A system of collecting taxes whereby
the amount of income tax withheld by
the withholding agent is constituted as a
full payment of the income tax due form
the payer on the said income. The payer
is not required to file an income tax
return for the particular income.
 Withholding tax
Withholding tax for
compensation income:
Commonly referred to as pay as you go
or pay as you earn.
A method of collecting the income tax at
source upon receipt of the income.
Shifting the incidence of
taxation
Shifting taxation is the process of
passing the burden of the tax to others.
A tax can be shifted when the taxpayer
is able to obtain a higher price for
something he sells or when he pays a
lower price for a commodity he
purchases.
 Tax Evasion
When there is fraud through pretension
and the use of other illegal devices to
lessen ones taxes, there is tax evasion
Under-declaration of income
Non-declaration of income and other items
subject to tax
Under-appraisal of goods subject to tariff
Over-declaration of deductions
 Assignment
Write your answer in a 1 whole sheet of
paper
1. Define the following:
Poverty
Poverty line
Degradation
2. Explain the causes of poverty
3. What are the effects of poverty?