GENERAL CONCEPTS AND PRINCIPLES OF TAXATION
Proportional
- tax based on fixed percentages of amount
Progressive
- tax the rate of which increases as the tax base or bracket increases
4. Tax Avoidance
- the exploitation of legally permissible alternative tax rates of assessing taxable income to reduce tax liability
5. Exemption
- the grant of immunity to particular persons of a particular class
2. Transformation
- the producer pays the tax and endeavor to recoup himself by improving his process of production
6. Capitalization
- the reduction in the selling price of income producing property by an amount equal to the capitalized value
7. Avoidance
- the tax saving device within the means sanctioned by law.
1. Shifting
- the transfer of the burden of tax by the original payer to someone else
3. Evasion
- the use of illegal means to defeat or lessen tax
Lifeblood Theory
- used to continue to perform the government's basic function of serving and protecting its people - give tangible and intangible benefits
a) It is inherent in sovereignty
-can enforce contribution in the absence of law
b) It is legislative in character.
-cannot be exercised by executive and juridical branches
specific
-tax of fixed amount by number, standard of weight, or measurement
DIRECT DOUBLE TAXATION means taxing twice:
1. By the same taxing authority, jurisdiction or taxing district 2. For the same purpose 3. In the same year or taxing period 4. Same subject or object 5. Same kind or character of the tax
9 SOURCES OF TAX LAWS
1. Constitution 2. National Internal Revenue Code 3. Tariff and Customs Code 4. Local Government Code (Book II) 5. Local tax ordinances/ City or municipal tax codes 6. Tax treaties and international agreements 7. Special Laws 8. Decision of the Supreme Court and the Court of Tax Appeals 9. Revenue rules and regulations and administrative ruling and opinion
LIMITIATIONS ON THE STATE'S POWER TO TAX
1. Inherent Limitations 2. ConstitutionalLimitations
MANIFESTATION OF LIFEBLOOD THEORY
1. Rule of "No Estoppel against the government" 2. Collection of taxes cannot be stopped by injunction • CourtofTaxAppeals-havetheauthoritytograntinjunctiontorestraincollectionof internal revenue tax, fee or charge 3. Taxes could not be the subject of compensation or set-off • Taxiscompulsorynotbargain. 4. Right to select objects (subjects) of taxation a) Subject or object to be taxed b) Purpose of the tax (as long as it is a public purpose) c) Amount or rate of the tax d) Kind of tax e) Apportionment of the tax f) Situs(place)oftaxation g) Manner, means, and agencies of collection of the tax 5. A valid tax may result in the destruction of the taxpayer's property. • Lawfultaxcannotbedefeated. • Bringouttheinsolvencyofthetaxpayer • Forfeitureofpropertythroughpolicepower
ASPECTS OF TAXATION
1. levy of imposition 2. assessment and collection
ELEMENTS OF SOUND TAX SYSTEM
Fiscal Adequacy Theoretical Justice or Equity Administrative Feasibility
As to taxing authority:
National Local
THEORIES OF TAXATION
Necessity, Lifeblood
PURPOSES OF TAXATION
Primary: Revenue or Fiscal Purpose Secondary: Regulatory Purpose
Constitutional Limitations
Progressive System Regressive System Regressive Tax Rates
As to graduation or rate:
Proportional, Progressive, Regressive
NATURE/ CHARACTERISTICS OF THE STATE'S POWER OF TAX
a) It is inherent in sovereignty b) It is legislative in character. c) Exemption of government entities, agencies and instrumentalities. d) International Comity e) Limitation of territorial jurisdiction f) Strongest among all the inherent powers of the state
SPECIAL ASSESSMENT Characteristics:
a. Levied only on land b. Not a personal liability of the person assessed c. Based wholly on benefits (not necessary) d. Exceptional both as to time and place
FACTORS IN DETERMINING THE SITUS OF TAXATION
a. Subject matter ( person, property, or activity) b. Nature of tax c. Citizenship d. Residence of the taxpayer e. Source of Income f. Place of excise, business or occupation being taxed
Unlimited
absence of limitation
REVENUE
all funds or income derives by the government.
CUSTOMS DUTIES
are taxes imposed on goods exported from or imported into a country.
Supreme
basta
PERMIT or LICENSE
charge imposed under the police power for purposes of regulation.
Plenary
complete
SCOPE OF TAXATION
comprehensive, unlimited, plenary, supreme
Conprehensive
covers all — business, persons, proffession
As to who bears the burden:
direct, indirect
Progressive System
emphasis on direct taxes
Secondary: Regulatory Purpose
employed as a devise for regulation or control
ESSENTIAL ELEMENTS OF TAX
enforced contribution generally payable by money proportionate in character levied upon persons, property, rights levied by law-making body of the sate levied for public purposes
Basis of Taxation
government may be able to perform its functions while the citizens may be secured in the enjoyment of the benefits.
levy or imposition
impact of taxation, legislative act
Local
imposed by LGUs
national
imposed by the national government
National
imposed under National Internal Revenue Code, collected by Bureau of Internal Revenue
Assessment and collection
incident of taxation, admin act
indirect
indemnify himself at the expense of another
SUBSIDY
is a pecuniary aid directly granted by the government to an individual or enterprise deemed beneficial to the public.
TOLL
is a sum of money for the use of something which is paid of the use of a road, bridge or public nature.
SPECIAL ASSESSMENT
is an enforced proportional contribution from owners of the lands for special benefits resulting from public improvements.
TARIFF
is the system of imposing duties on the importation or exportation of goods
Administrative Feasibility
law must be capable of effective and efficient enforcement
local
local govt
Regressive System
more indirect taxes imposed
Power of taxation
most absolute of all the powers
As to scope:
national local
As to subject matter or object:
personal, poll, or capitation property excise
3 INHERENT POWERS OF THE STATE
police power, eminent domain, taxation
PENALTY
sanction imposed as a punishment for violation of law or acts deem injurious.
Fiscal Adequacy
sources must be adequate
As to determination of fixed amount:
specific, ad valorem
property
tax imposed on property in proportion to its value
personal, poll, or capitation
tax of a fixed amount imposed upon individual residing within a specified territory.
ad valorem
tax of fixed proportion of the value of the property
excise
tax on certain rights and privileges e.g. sin prods / imported goods
Regressive Tax Rates
tax rates which decreases as tax base or bracket increases
Theoretical Justice or Equity
tax should be proportionate
Regressive
tax the rate of which decreases as the tax base or bracket increases
TAXES
the enforced contributions levied by the law-making body of the state for the support of the government and all the public needs.
Police Power
the power of promoting public welfare and regulating the use of liberty and property.
eminent domain
the power to acquire private property for public purpose upon payment of just compensation
Power of Taxation
the power which raises revenue for the expenses of the government
TAXATION
the process by which the sovereign, through its law-making body, imposes burdens for the purpose of raising revenues to carry out legitimate objects of the government
Necessity Theory
to preserve the state's sovereignty a means to give for protection and facilities
Primary: Revenue / Fiscal Purposes
to provide funds or property to promote general welfare and protection of its citizens
direct
tp cannot shift to another
As to purpose:
• Primary,Fiscal,orRevenuePurpose • Secondary, Regulatory, Special, or Sumptuary Purpose