UNIT VI TAXATION

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 OBJECTIVES

Learning Objective I Learning Objective II Learning Objective III

Determine what is Taxation Analyze the evolution of Evaluate the advantages
Taxation and disadvantages of
taxation.

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 Taxation
It is a means of raising funds for the operation of the
government constituting the lifeblood of the economy and
society.

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 Pre-
Hispanic
Philippines • Smallest political units was called “Barangay”
• People then, paid their “Buwis” or “Handug” to
their respective Datus by means of Gold or
agricultural products.

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 Hispanic
Philippines • Polo y Servicios: Men aged 16-60 are
required to render labor in the community for
40 days. Paying Falla can exempt from forced
labor.
• Bandala: a system requiring Indios to sell their
goods to the government in a very unfair price.

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 Hispanic
Philippines • In an Encomienda System, Encomienderos
were given a right to collect taxes in their
assigned areas.
• Tribute or “Buwis” can be payed in kind or
cash.
• Tribute was replaced by Cedula which requires
everyone who is 18-years old and above to
pay taxes.
• Contador de Resultas was the collector of
taxes and head of financial matters. 6
Americans
in the
Philippines
• Civil Governor Luke Wright passed the
Reorganization Act no. 1189 which created Bureau
of Internal Revenue.
• The first reorganization of the BIR during the term of
Collector William T. Holding created eight divisions
these are; Accounting, cash, Clerical, Inspection, Law,
Real Estate, License, and Records.

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Americans
in the
Philippines
• In May 1921, the real estate, license, and Cash
divisions were transferred to the City of Manila,
leaving the Bureau with five divisions, Administrative,
Law, Accounting, Income Tax, and Inspection.
• In 1940, Commonwealth Act No. 465, was created
to impose resident tax or cedula, which cost fifty
centavos.

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Japanese in
the
Philippines • When World War II broke out, BIR together with
Customs office which was headed by director of
Customs and Internal Revenue.
• Japanese Government in the Philippines issued a
new sets of banknotes named, “Mickey Mouse
Money”.
• 1943, Japanese imposed a war tax on all Jews
residing in the country.
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 Post-War
Philippines
• Bureau of Internal Revenue was reestablished when
United States recognized the Philippines its
independence.
• During Quirino administration, new tax measures
were passed, including higher corporate taxes.

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 Post-War
Philippines
• Under Marcos administration, 70% of the total tax
collection came from indirect tax or taxes from the
consumers.
• Aquino administration, the 1986 Tax Reform
program was established to improve the
responsiveness of the tax system.
• Value-added Tax was introduced and put into
effect in 1988.
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 Post-War
Philippines
• Ramos administration’s Comprehensive Agrarian
Reform Program in 1997 was implemented which
aimed to raise revenue in the government as his
government failed to sustain the increase in revenue.
• Arroyo administration increased in government
spending without adjusting the tax collection thus,
resulting to ballooning deficits from 2002 to 2004.
Expanded Value-added Tax was signed into Law
during her term.
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 Post-War
Philippines
• Aquino III administration has no new tax reform
program however he implemented Republic Act
1305 or Sin Tax Reform which imposes tax on
Liquor and Cigarettes. Taxes that were collected by
Sin Tax Reform was deposited on Department of
Health funds and in the free health premium
insurance for PhilHealth members.

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 Post-War
Philippines
• Duterte administration implemented Republic Act no.
10963 or Tax Reform for Acceleration and
Inclusion (TRAIN) law.
• Republic Act no. 1134 was enacted to impose higher
excise tax on heated Tobacco products and Vapor
Products as part of the government initiative to
implement the Universal Health Program (UHP) of the
Philippines.
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