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Property is taken or destroyed Money is taken to support the Property is taken for public
to promote general welfare government use
Cannot be delegated, if
delegated, it should be to the
Can be expressly delegated Can be expressly delegated
legislative department of the
LGU (e.g. to make ordinances)
No imposition as to amount,
Limited to the cost of
Generally, NO limit on instead, it is the Government
regulation, license and other
amount which is to compensate the
necessary expense
property taken.
b. Equality or Theoretical Justice based on the taxpayers ability to pay; must be progressive
c. Administrative Feasibility capability of being effectively enforced. Tax laws should not obstruct
business growth and economic development.
2. Purpose
a. Primarily, to raise revenue
b. To regulate (inflation, economic and social stability, social control, etc.)
c. To compensate the benefits provided by the government to the people
3. Characteristics (ILS)
a. Inherent power of the state.
b. Exclusively lodged with the legislative body
c. Subject to inherent and constitutional limitations
4. Nature
a. Plenary full and complete in all respect
b. Comprehensive it covers persons, businesses, activities, professions, rights and privileges.
c. Supreme it is supreme ONLY insofar as the selection of the subject of taxation is concerned
d. Not Absolute it is subject to limitations
Lecture 1: GENERAL PRINCIPLES
b. Constitutional Limitations
b.1. Due process clause
b.2. Equal protection clause
b.3. Freedom of speech and of the press
b.4. Non-impairment of contracts
b.5. Rule requiring that appropriations, revenue and tariff bills shall originate exclusively from the House
of Represenatatives (Congress)
b.6. Uniformity, equality, and progressivity of taxation
b.7. Tax exemption of the properties actually, directly and exclusively used for religious, charitable and
educational purposes.
b.8. Voting requirement (2/3) in connection with the legislative grant of tax exemption
b.9. Non-impairment of the jurisdiction of the Supreme Court in tax cases
b.10. Exemption from taxes of the revenues and assets of educational institutions, including grants,
endowments, donations and contributions
b.11. Power of the Presidentto veto any particular item (item veto) or items in an appropriation, revenue
or tariff bill (pocket veto).
b.12. Necessity of an appropriation before money may be paid out of the public treasury
b.13. Non-appropriation of public money or property for the use, benefit or support of any sect, church
or system of religion
1. Direct Duplicate Taxation double taxation in the objectionable or prohibited sense; not allowed in the
Philippines. This constitutes a violation of substantive due process.
Elements:
i. Same property or subject matter is taxed twice
ii. Same purpose
iii. Same taxing authority
iv. Same jurisdiction
v. Same taxing period
vi. Same kind or character of tax
2. Indirect Duplicate Taxation legal/permissible. The absence of one or more of the above-mentioned
elements.
V. Theories of Taxation
1. Necessity Theory (Theory of Taxation) the power to tax is an attribute of sovereignty emanating from
necessity (national defense, health, education, public facilities, etc.).
2. Lifeblood Theory (Importance of Taxation) without taxes, the government would be paralyzed for lack
of the motive power to activate and operate it.
3. Benefits Protection Theory/ Reciprocal Duties (Basis of Taxation) there is a symbiotic relationship
between the State and the citizens whereby in exchange of the protection and benefits that the citizens
received from the State, taxes are paid.
7. Tax laws are special laws which prevail over a general law.
8. Tax laws operate prospectively unless the purpose of the legislature is to give a retrospective effect.
3. Characteristics of Taxes
a. Forced charge
b. Generally payable in money
c. Exclusively levied by the legislative body
d. Assessed in accordance with some reasonable rule of apportionment (ability-to-pay principle)
e. Imposed by the State within its jurisdiction
f. Levied for public purpose
4. Classification of Taxes
a. As to subject matter:
i. Personal tax imposed upon persons of certain class with fixed amount (e.g. Community tax or poll
tax)
ii. Property tax assessed on property of certain class (e.g. Real Property tax)
iii. Excise tax imposed on the exercise of privilege (e.g. income tax, donors tax, estate tax, etc.)
iv. Custom duties charged upon the commodities being imprted into or exported from a country (e.g.
tariffs)
b. As to burden:
i. Direct tax both incidence or liability for the payment of tax as well as the impact or burden of the
tax falls on the same person (e.g. income tax)
ii. Indirect tax the incidence or liability for the payment of tax falls on one person but the impact or
burden of the tax falls on another person (e.g. VAT)
c. As to purpose
i. General tax levied for the general or ordinary purposes of the government
ii. Special tax levied for special purpose
Lecture 1: GENERAL PRINCIPLES
d. As to measure of application
i. Specific tax imposes a specific sum by the head or number or by some standard of weight or
measurement (e.g. excise tax on cigarettes)
ii. Ad Valorem tax tax upon the value of the article or thing subject to taxation (e.g. VAT of 12%
regardless of the value of sales)
e. As to taxing authority
i. National tax levied by the National Government (e.g. income tax, business taxes, transfer taxes)
ii. Local tax imposed by the Local Government (e.g. Poll tax, real property taxes)
f. As to rate
i. Progressive tax rate or amount of tax increases as the amount of income increases (e.g.
normal/tabular/schedular tax of 5% - 32%, tabular tax for donors tax and estate tax)
ii. Regressive tax rate dcreases as the amount of income to be taxed increases (not applicable in
the Philippines)
iii. Proportionate tax based on fixed proportion or rate of the value of the property assessed (e.g. VAT
of 12%)
2. Revenue Regulations
- These are interpretations of an administrative body (BIR) intended to clarify or explain the tax laws and
carry into effect its general provisions by providing details of administration and procedure.
- It is promulgated (made) by the Secretary of Finance, upon the recommendation of the Commissioner
of Internal Revenue (quasi-legislative function).
- It must be reasonable, within the authority conferred, not contrary to laws, must be published and
prospective in application.
Lecture 1: GENERAL PRINCIPLES
3. BIR Rulings
- The BIR issues a general interpretation of tax laws usually upon a requrest of a taxpayer to clarify a
provision of law.