1.

The Constitutional Law provides the state with police power, power of taxation, and power of eminent
domain. These are the three inherent powers of the state granted by the Bill of Rights. These three inherent
powers are designed to provide equality, authority and liberty in order to protect the rights as stated in the
Bill of Rights. It is the "framework" of the laws the USA is founded on.

Included in the Constitutional Law are the safeguards in place for the Bill of Rights. There are five of these
safety measures: Right to due process and equal protection, freedom of expression, prohibition of illegal
seizures and searches, impairment clause, and a guarantee against injustice.

Police power is pretty self explanatory in that the state has the right to oversee the police forces in the state
to ensure peoples' rights are upheld appropriately. It also keeps at bay martial law, which is when the
military is able to occupy a town, city, or other living area and restrict peoples' movements.( afp, pnp)

Eminent domain is the act in which property can be seized from a citizen with due compensation. In other
words, the state can take over someone's land if they give a monetary compensation, as long as there is a
true reason for such an action.( public utilities, napocor, tranportation- lrt,mrt)

Power of taxation allows the state to determine if they will have a state income tax and what that state
income tax will be. The taxes can be voted on by citizens of the state, but often a tax being raised is based on
economical need that the state has. Therefore, the states still oversee the increase or decrease in taxes.
These are separate from the Federal Taxes. (ITR, cedula,real prop. Tax)

Police Power - is the power of the state to regulate freedoms and property rights of individuals for the
protection of public safety, health, and morals or the promotion of the public convenience and general
prosperity.
Eminent Domain - is the power to take private property for public use upon payment of just compensation.
Power of Taxation - is the power of the state to impose tax on individuals and properties to support the
government.

2. Definition taxation
A means by which governments finance their expenditure by imposing charges on citizens and entities.
Governments use taxation to encourage or discourage certain economic decisions. For example, reduction in
taxable personal (or household) income by the amount paid as interest on home mortgage loans results in
greater construction activity, and generates more jobs. See also taxation principles.

3. Taxation is compulsory on the part of the government. The government receives tax from the national and
foreigner who are doing business in their home country in order to make good profit. So the government
collects the taxes and put in on the different projects for their people. There are two types of the taxes one
is sale tax and other is income tax.

Nature of taxation
* Inherent power of sovereignty Basis of taxation
* Legislative in nature
*Public purpose Charge to tax
*Territorial in operation Residence
*Exemption of the government Income from employment
*Strongest among the inherent Source of employment
power of the state Benefits (in kind)
*Subject of constitutional and Expatriate concessions
inherent Relief for foreign taxes
Deductions against income
 Charge to tax
A resident citizen of the Philippines is taxed on worldwide income. Non-resident citizens and foreign nationals,
whether residents or non-residents, are taxed only on income derived from sources within the Philippines.

Salaries, allowances, benefits and other forms of compensation for labour or personal services performed in the
Philippines is treated as Philippine-sourced income, regardless of where the payment is made.
Residence
The Philippines income tax law contains a formal definition of residence which may not necessarily apply under
immigration laws. Residence requires physical presence and intent to take up residence. Each case must be
determined on its own facts and circumstances. In practice, expatriates with employment contracts with local
companies for a two-year stay in the country may qualify for residency for tax purposes.
Income from employment
Income from employment i.e. compensation income can either be subject to individual income tax or to fringe
benefits tax.
Source of employment
Income from employment ordinarily has its source in the place in which services are performed.
Benefits (in kind)
The fringe benefits tax (FBT) is imposed on fringe benefits, in cash or kind, given to managerial and supervisory
employees. The FBT rate is the top marginal rate applicable to the expatriate. Benefits given to rank and file
expatriates are not covered by the FBT, but are instead taxed as part of compensation.

The FBT is a tax on the income received by the employee, but the tax is borne by the employer. It is a direct liability
of the employer and is required to be paid on a calendar quarter basis.

Benefits provided to employees which are necessary for the trade or business of the employer, or provided for the
convenience of the employer, and certain benefits of small amounts (de minimis benefits) are not subject to tax,
whether FBT or tax on compensation.

Expatriate concessions
Expatriates are only taxable on Philippine-sourced income. Concession is by way of tax relief under a tax treaty, or
preferential tax rates for expatriates employed by certain entities.
Relief for foreign taxes
A foreign national, whether resident or non-resident, is only subject to income tax on Philippine sourced income. As
such, no credit for income taxes paid on such income to foreign countries is allowed against Philippine income tax
payable.
Deductions against income
Foreign nationals subject to the graduated rates on compensation income are entitled to deduct from gross income
personal exemptions and health/hospitalisation premium payments. There are no other deductions allowable from
compensation income. No such deductions are allowed to foreign nationals subject to the 25% and 15% tax.

4. ASPECTS OF TAXATION
1. Levying of the tax- The imposition of tax requires legislative intervention. In the Philippines, it is
Congress that levies the tax;
2. Collection of the tax levied. This is essentially an administrative function.
The two processes together constitute the taxation system.

BASIC PRINCIPLES OF A SOUND TAX SYSTEM. (IMPT!)

1. Fiscal Adequacy- The sources (proceeds) of tax revenue should coincide with and approximate needs of
government expenditures. The sources of revenue should be sufficient and elastic to meet the demands of
public expenditures;
2. Theoretical Justice- The tax system should be fair to the average taxpayer and based upon his ability to pay.
3. Administrative Feasibility- The tax system should be capable of being properly and efficiently administered
by the government and enforced with the least inconvenience to the taxpayer.