THE EVOLUTION

OF PHILIPPINE
TAXATION
 Taxation
in Spanish
Philippines
TAXATION DURING THE COMMONWEALTH PERIOD

Taxation during Spanish Period

• Taxation during the Spanish period was COMPULSORY.
• All Spanish colonies in America and the Philippine were
required to pay taxes for two reasons:
TAXATION DURING THE COMMONWEALTH PERIOD

Taxation during Spanish Period

• As recognition of Spain's sovereignty over
the colonies
• To defray the expenses of pacification (the
act of forcibly suppressing hostility within
the colonies) and governance.
TAXATION DURING THE COMMONWEALTH PERIOD

Taxation during Spanish Period

• Tributo
• Sanctorum
• Donativo
• Caja de comunidad
• Servicio personal
TAXATION DURING THE COMMONWEALTH PERIOD

Taxation during Spanish Period

Tributo
• Taxation during the A general tax paid
by the Filipinos to Spain which
amounted to eight Reales.
• Required to pay the tribute were the:
TAXATION DURING THE COMMONWEALTH PERIOD

Taxation during Spanish Period

Tributo
• 18 to 50 years old male.
• Carpenters, bricklayers, blacksmiths, tailors, and shoemaker.
• Town workers such as those in road construction, and those
who are public in nature.
TAXATION DURING THE COMMONWEALTH PERIOD

Taxation during Spanish Period

Sanctorum
• A tax in the amount of 3 Reales.
• Required for the cost of Christianization
including the construction of churches and
the purchase of materials for religious
celebrations.
TAXATION DURING THE COMMONWEALTH PERIOD

Taxation during Spanish Period

Caja de comunidad
• A tax collected in the amount of 1 Real for
the incurred expenses of the town in the
construction of roads, repair of bridges, or
the improvement of public buildings.
TAXATION DURING THE COMMONWEALTH PERIOD

Taxation during Spanish Period

Servicio personal
• Also called polo y servicios
• A form of forced labor during the Spanish period in the
Philippines.
• All able-bodied males, 16 to 60 years old were required to work
in the construction of bridges, churches, and galleon ships. They
were called polista.
TAXATION DURING THE COMMONWEALTH PERIOD

Taxation during Spanish Period

Servicio personal
• A polista can be freed from forced labor when
he pays a fine or fine.
• Gobernadorcillo, cabeza de barangay, and other
members of the principalia were exempt from
forced labor and falla.
 TAXATION IN SPANISH PHILIPPINES

REVOLTS AGAINST THE TRIBUTE

Cagayan and Dingras Revolts (1589)
• Occurred on Luzon in the present-day provinces of Cagayan and
llocos Norte.
• Revolt of the llocanos, lbanags and other Filipinos was triggered
by the alleged abuses of the tax collectors including the
collection of high taxes.
• The Philippine tax system was also reformed.
 TAXATION IN SPANISH PHILIPPINES

REVOLTS AGAINST THE TRIBUTE

Agustin Sumuroy's Revolt (1649-1650)
• On June 1, 1649, Agustin Sumuroy rose in arms against the
Spaniards over the polo y servicio or forced labor system.
• Revolt was triggered when the town mayors sent the Warays to
the shiovards in Cavite for forced labor.
 TAXATION IN SPANISH PHILIPPINES

REVOLTS AGAINST THE TRIBUTE

Agustin Sumuroy's Revolt (1649-1650)
• It was spread to Cebu, Masbate, Camiguin, Bicol,
Camarines, Albay, Zamboanga in Mindanao and
Surigao.
• David Dula, Sumuroy's co-conspirator continued
the quest but was wounded in one of the fierce
battles he fought with the Spaniards.
 TAXATION IN SPANISH PHILIPPINES

REVOLTS AGAINST THE TRIBUTE

Francisco Maniago's Revolt (1660-1661)
• In 1660, Francisco Maniago, a Kapampangan, led an uprising in
Pampanga.
• The Kapampangans were against the tribute, forced labor and rice
exploitation.
 TAXATION IN SPANISH PHILIPPINES

REVOLTS AGAINST THE TRIBUTE

Francisco Maniago's Revolt (1660-1661)
• For eight months, they were made to
work under unfair conditions.
• This was the start of a bloodier revolt
in Pangasinan.
 TAXATION IN SPANISH PHILIPPINES

REVOLTS AGAINST THE TRIBUTE

Andres Malong Revolt (1660-1661)
• Malong was the Maestro de Campo of Binalatongan, now San
Carlos City, Pangasinan.
• He hoped to be the King in the province of Pangasinan as he
assisted many Spaniards in governing different towns but
abandoned it when the war broke out in Pampanga.
 TAXATION IN SPANISH PHILIPPINES

REVOLTS AGAINST THE TRIBUTE

Andres Malong Revolt (1660-1661)
• In the 1660s, was coaxed by Maniago to revolt against
the abuses of the Spaniards.
• Andres Malong succeeded and proclaimed himself
King of Pangasinan.
 TAXATION IN SPANISH PHILIPPINES

REVOLTS AGAINST THE TRIBUTE

Andres Malong Revolt (1660-1661)
• In the 1660s, was coaxed by Maniago to
revolt against the abuses of the Spaniards.
• Andres Malong succeeded and proclaimed
himself King of Pangasinan.
 TAXATION IN SPANISH PHILIPPINES

THE TAX REFORM OF 1884

• One of the good reforms which

Spain introduced in the 19th
century.
• Provided by the Royal Decree
of March 6, 1884
 TAXATION IN SPANISH PHILIPPINES

THE TAX REFORM OF 1884

• TWO IMPORTANT PROVISIONS:

• Abolition of the hated tribute and its replacement
of cedula tax.
• Reduction of the 40-day annual forced labor
(polo) to 15 days.
 TAXATION IN SPANISH PHILIPPINES

THE TAX REFORM OF 1884

The Cedulas Personales
• First issued based on the Roval Decree on
March 6, 1884.
• All men and women residents of the islands
who were over 18 years old were required to
obtain a cedula.
 TAXATION IN SPANISH PHILIPPINES

THE TAX REFORM OF 1884

The Cedulas Personales
• The rate of taxes ranged from 1.50 pesos
to 25 pesos, and a tenth, gratis for priests,
soldiers and privileged classes.
Taxation
under the
Americans
 TAXATION UNDER THE AMERICANS

1898-1903
• From 1898, the Americans
followed the Spanish system of
taxation with some
modifications.
 TAXATION UNDER THE AMERICANS

Philippine Organic Act (1901)

• The U.S. Congress passes the Philippine Organic Act, also
known as the Spooner Act, which serves as the country's basic
legal framework.
• The act established a civil government in the Philippines,
replacing the military government that had been in place since
the end of the Spanish-America.
 TAXATION UNDER THE AMERICANS

Philippine Organic Act (1901)

• The U.S. Congress passes the Philippine Organic Act, also
known as the Spooner Act, which serves as the country's basic
legal framework.
• The act established a civil government in the Philippines,
replacing the military government that had been in place since
the end of the Spanish-America.
 TAXATION UNDER THE AMERICANS

Civil Government in the Philippines

• William Howard Taft (1901)
• Luke Edward Wright (1904)
• Henry Clay Ide (1906)
• James F. Smith (1907)
• William Cameron Forbes (1909)
 TAXATION UNDER THE AMERICANS

Civil Government in the Philippines

• Francis Burton Harrison (1913)
• Leonard Wood (1921)
• Henry L. Stimson (1927)
• Dwight D. Eisenhower (1935-1939)
 TAXATION UNDER THE AMERICANS

Taxation under the Civil Government

• First Income Tax Law (1902)
• Creation of the Bureau of Internal Revenue (1904)
• Jones Law (1916)
• National Internal Revenue Code (1939)
 TAXATION UNDER THE AMERICANS

Income Tax Law

• The Philippine Commission, under the American colonial
government, enacts the country's first income tax law.
• This tax is initially imposed on individuals and corporations,
marking the beginning of formal taxation in the Philippines.
 TAXATION UNDER THE AMERICANS

Income Tax Law

Exemptions
• Low Income Earners
• Specific Professions or Occupations
• Certain Types of Incomes
• Government Officials
• Religious and Charitable Organizations
• Non-Resident Aliens
 TAXATION UNDER THE AMERICANS

Land Taxation
• This tax was based on the assessed value of land, and it aimed
to encourage efficient land use and generate revenue for the
government.
• The land tax system was part of broader land reforms intended
to restructure the agrarian system inherited from Spanish rule.
 TAXATION UNDER THE AMERICANS

Bureau of Internal Revenue

• The BIR Code was enacted in 1904,
coinciding with the establishment of
the Bureau of Internal Revenue. The
BIR was tasked with implementing
and enforcing tax laws in the
Philippines.
 TAXATION UNDER THE AMERICANS

Internal Revenue Code of 1904

• The American colonial government enacted the Internal
Revenue Code in 1904. This code served as the basis for the
taxation system during the American period.
• The code introduced various taxes, including income tax,
excise taxes, and other internal revenue taxes.
 TAXATION UNDER THE AMERICANS

Internal Revenue Law

• License taxes on firms dealing in alcoholic beverages and
tobacco.
• Excise taxes on alcoholic beverages and tobacco products.
• Taxes on bank and bankers.
• Document stamp taxes.
• The Cedula
 TAXATION UNDER THE AMERICANS

Internal Revenue Law

6.Taxes on insurance and insurance companies
7. Taxes on forest products.
8.Mining concessions.
9.Tax on business and manufacturing
10.Occupational licenses
 TAXATION UNDER THE AMERICANS

Excise Tax
• Excise taxes were a significant
component of the code. These taxes
were levied on specific goods,
services, or activities, contributing
to the overall revenue collection of
the government.
 TAXATION UNDER THE AMERICANS

Excise Tax
• Examples of Taxed Goods and Services
⚬ Alcohol
⚬ Tobacco
⚬ Fuel
⚬ Soft Drinks and Sugary Beverages
⚬ Luxury Goods
⚬ Firearms and Ammunition
 TAXATION UNDER THE AMERICANS

Jones Law
• The Jones Law granted the Philippines greater autonomy
and introduced amendments to the income tax system. It
allowed for the election of Filipino nationals to both
houses of the legislature and provided for a more gradual
process toward self-governance.
 Taxation
during the
Commonwealth
Period
TAXATION DURING THE COMMONWEALTH PERIOD

Commonwealth Taxation
• Taxation during the commonwealth
period (1935-1945) was influenced by the
new measures and legislation introduced
by the commonwealth government to
make the taxation system more equitable.
TAXATION DURING THE COMMONWEALTH PERIOD

1936
• Income tax rates were increased, adding a
surtax rate on individual net incomes in
excess of 10,000 pesos.
TAXATION DURING THE COMMONWEALTH PERIOD

1937
• Cedula tax was abolished, which
appeared to be a progressive move; but in
1940, a residence tax was imposed on
every citizen aged 18 years old and on
every corporation.
TAXATION DURING THE COMMONWEALTH PERIOD

1939
• National Internal Revenue Code was
drafted, which replaced the normal tax of
3% and the surtax on income with a
single tax at a progressive rate. Personal
exemptions were also reduced.
TAXATION DURING THE COMMONWEALTH PERIOD

1941
• Commonwealth government enacted the
Emergency Tax Act, which imposed
additional taxes on income, inheritance,
business, amusement, and other sources
to finance the war effort against Japan.
TAXATION DURING THE COMMONWEALTH PERIOD

1943
• Japanese occupation forces established the
Philippine Executive Commission, which
abolished the National Internal Revenue Code
and enacted the Revised Internal Revenue Law,
which increased the tax rates and broadened the
tax base.
TAXATION DURING THE COMMONWEALTH PERIOD

1945
• Commonwealth government was restored and
the National Internal Revenue Code was
reinstated. The Emergency Tax Act was also
amended to provide relief for war victims and to
raise funds for reconstruction.
TAXATION DURING THE COMMONWEALTH PERIOD

Importance of Commonwealth Taxation

• Commonwealth government was restored and
the National Internal Revenue Code was
reinstated. The Emergency Tax Act was also
amended to provide relief for war victims and to
raise funds for reconstruction.
Fiscal Policy
from 1946
to Present
 FISCAL POLICY FROM 1946 TO PRESENT
FISCAL POLICY
• It refers to the spending programs and tax
policies that the government uses to guide the
economy.

• Governments typically use fiscal policy to

promote strong and sustainable growth and
reduce poverty.
 FISCAL POLICY FROM 1946 TO PRESENT
FISCAL POLICY
• Fiscal measures used along with monetary policy to achieve
economic policy goals, including:

A high rate of Stable prices and

Full employment
economic growth wages
 FISCAL POLICY FROM 1946 TO PRESENT
What is Fiscal Policy?
• Fiscal policy is the means by which a government adjusts its
spending levels and tax rates to monitor and influence a
nation's economy.

• It is the sister strategy to monetary policy through which a

central bank influences a nation's money supply.
 FISCAL POLICY FROM 1946 TO PRESENT
What Is Monetary Policy?
• Monetary policy is a set of tools used by a
nation's central bank to control the overall
money supply and promote economic growth
and employ strategies
 FISCAL POLICY FROM 1946 TO PRESENT
What Is Monetary Policy?
• Refers to central bank activities that are
directed toward influencing the quantity of
money and credit in an economy.
 FISCAL POLICY FROM 1946 TO PRESENT
How fiscal policy works
• Government taxation and spending are the
primary tools used to conduct fiscal policy.

• Government lowers taxes, it can lead to an

increase in consumer spending (consumption)
and business investment.
 FISCAL POLICY FROM 1946 TO PRESENT
Evolution of Fiscal Policy?
• The effects of the war on the economy were
minimal in comparison to the impact of the
Spanish conquistadores. However, as the country
needed assistance from the US, the dependence
of the Americans on the Philippines was
exploited.
 FISCAL POLICY FROM 1946 TO PRESENT
The Administration of President Manuel Roxas

• The economic situation was so problematic that by 1949, there

was a severe lack of funds in many aspects of governance, such
as the military and education sectors.
 FISCAL POLICY FROM 1946 TO PRESENT
The Administration of President Manuel Roxas

• United States advised the adoption

of direct taxation.
• President Manuel Roxas declined
the proposal.

President Manuel Roxas

 FISCAL POLICY FROM 1946 TO PRESENT
The Time of President Elpidio Quirino

• Economic growth came through the implementation of import

and exchange controls that led to import substitution
development replacing foreign imports with domestic
production
 FISCAL POLICY FROM 1946 TO PRESENT
The Time of President Elpidio Quirino

• New tax measures were also passed,

which included higher corporate tax rates
that increased government revenues-tax
in 1953 increased fold compared to 1948.

President Elpidio
Quirino
 FISCAL POLICY FROM 1946 TO PRESENT
Presidencies of Magsaysay, Garcia, and Macapagal

• Promised to study the tax structure and policy of the country

through the creation of a Tax Commission In 1959 by means
of Republic Act No. 2211.
FISCAL POLICY FROM 1946 TO PRESENT
Presidencies of Magsaysay, Garcia, and Macapagal

Pres. Ramon del Fierro Pres. Carlos P. Garcia Pres. Diosdado Pangan
Magsaysay Sr. Macapagal Sr.
 FISCAL POLICY FROM 1946 TO PRESENT
Presidencies of Magsaysay, Garcia, and Macapagal

• Post-war fiscal policy remained regressive, characterized by

the overburdening of the lowest classes while the landed elite
who held business interests were in Congress to ensure that
taxes would not be levied to them who belonged to the higher
class society.
 FISCAL POLICY FROM 1946 TO PRESENT
From 1959-1968

• Congress did not pass any tax legislation despite important

changes in the economy.
• Collection of taxes remained poor; tax structure was still
problematic; and much of public funds were lost to corruption,
which left the government incapable of funding projects geared
toward development.
FISCAL POLICY FROM 1946 TO PRESENT
Marcos Authoritarian Regime

• Tax remained regressive.

• Tax system was still heavily
dependent on indirect taxes.
• Tax system also remained
unresponsive.

Pres. Ferdinand Marcos Sr.

 FISCAL POLICY FROM 1946 TO PRESENT
Administration of Corazon Aquino

• She reformed the tax system through the 1986 Tax Reform
Program.
• Aim to improve equity by ensuring that similarly situated
individuals and firms bear the same tax burden, promote growth
by withdrawing or modifying taxes.
 FISCAL POLICY FROM 1946 TO PRESENT
Administration of Corazon Aquino

• Significant tax reform introduced the value-added tax (VAT) in

1988.
• A uniform 10% rate on domestic and imported goods, zero
percent on exports, and a 2% tax on entities with annual sales
below 5,200,000.
 FISCAL POLICY FROM 1946 TO PRESENT
Administration of Corazon Aquino

• The VAT laws were signed in 1986 and put to effect in 1988.
Although initially a reliable revenue source, subsequent tax laws
and exemptions reduced its reliability.
• Bureau of Internal Revenue (BIR) through Executive order 127 it
reconstructed its reforms and department.
 FISCAL POLICY FROM 1946 TO PRESENT
Administration of Corazon Aquino

• Corruption was relatively reduced

• The tax reform of the Aquino
administration, both tax and
revenue effort rose, increasing
from 10.7% in 1985 to 15.4% in
1992.
Pres. Corazon Aquino
 FISCAL POLICY FROM 1946 TO PRESENT
The administration of Fidel V. Ramos in 1992

• Fidel V. Ramos's administration in 1992, increased political

stability facilitated ongoing economic growth.
• In 1997, the government implemented the Comprehensive Tax
Reform Program, aiming to broaden the tax system, minimize
avoidance, and simplify procedures.
 FISCAL POLICY FROM 1946 TO PRESENT
The administration of Fidel V. Ramos in 1992

• The Value Added Tax (VAT) base was

expanded in 1997 to include services, with
specific provisions for exemptions in various
sectors, such as cooperatives, food products,
and essential services like education and
residential leases.
Pres. Fidel V. Ramos
FISCAL POLICY FROM 1946 TO PRESENT
President Joseph Estrada

• His term for President was too short

to constitute any change in the Tax
System.
• Then Vice President Gloria
Macapagal-Arroyo was swept to
power through another EDSA President Joseph Estrada
Revolution
 FISCAL POLICY FROM 1946 TO PRESENT
President Joseph Estrada

• She undertook increased government spending without adjusting

tax collections which resulted in large deficits from 2002-2004.
• Government had to look for additional sources of revenue and in
2005, the Expanded Value-Added Tax (E-VAT) was signed into
law as Republic Act 9337.
 FISCAL POLICY FROM 1946 TO PRESENT
President Joseph Estrada

• This expanded the VAT based on

VAT energy products
• Select professional services were
also taxed. In February 2006, the
VAT tax rate was also increased
from 10% to 12%. Pres. Gloria
Macapagal Arroyo
 FISCAL POLICY FROM 1946 TO PRESENT
Administration of Benigno Aquino III

• No new taxes would be imposed and additional revenue would

have to come from adjusting Existing Taxes.
• Administration Tax Reform, motivations for which Republic Act
10351 was passed, and government revenues from alcohol and
tobacco excise taxes increased.
 FISCAL POLICY FROM 1946 TO PRESENT
Administration of Benigno Aquino III

• Sin Tax Reform allowed for the increase of

the Department of Health budget (triple in
2015)
• Free health insurance premiums for the poor
people enrolled in PhilHealth increased (from
55.2million in 2012 to 515.4 million in 2015).
 FISCAL POLICY FROM 1946 TO PRESENT
Administration of Benigno Aquino III

• Sin Tax Reform could impact social services

as it’s allowed for the increase of the
Department of Health budget (triple in 2015)
and free health insurance premiums for the
poor people enrolled in PhilHealth
 FISCAL POLICY FROM 1946 TO PRESENT
Administration of Benigno Aquino III

• Free health insurance premiums for

the poor people enrolled in
PhilHealth increased (from
55.2million in 2012 to 515.4
million in 2015).

Pres. Benigno Aquino III

 FISCAL POLICY FROM 1946 TO PRESENT
Administration of President Rodrigo Roa Duterte

• Promised tax reform, particularly in income taxes as it vowed to

lower income tax rates shouldered by working Filipinos
• Present income tax scheme of the country is the second highest
in Southeast Asia and the current laws on income taxes were
outdated.
FISCAL POLICY FROM 1946 TO PRESENT
Administration of President Rodrigo Roa Duterte

• Proposed tax reform also

seeks to limit VAT
exemptions and increase
excise taxes on petroleum
products automobiles.

Pres. Rodrigo Roa Duterte

 FISCAL POLICY FROM 1946 TO PRESENT
Importance of fiscal policy

• Fiscal policy is an important tool for managing the economy

because of its ability to affect the total amount of output
produced that is, gross domestic product.
• The ability of fiscal policy to affect output by affecting
aggregate demand makes it a potential tool for economic
stabilization.
 FISCAL POLICY FROM 1946 TO PRESENT
Importance of fiscal policy

• Fiscal policy is an important tool for managing the economy

because of its ability to affect the total amount of output
produced that is, gross domestic product.
• The ability of fiscal policy to affect output by affecting
aggregate demand makes it a potential tool for economic
stabilization.
Thank you
for
listening