general principles TABAG + AMPONGAN

power to tax

- act of levying tax - raise income to defray gov't expenses

2 classification on tax exemption

- express/ affirmative - implied/ exemption by omission

what to do if accounting principles are not enforceable in accordance with the law?

- not enforceable -taxes prevail over GAAP

nature of tax laws

-CIVIL not penal in nature -penalties provided for violation

Inherent Limitations (PINES)

-Public purpose -International Comity -Non-delegability of taxing power -Exemption of the government -Situs of taxation

Due process of law

-Requires no oppression in assessment and collection of taxes -must be for public purpose -imposed within territorial boundaries

assessment and collection

-act of administration or implementation of tax laws

payment of taxes

-act of compliance by taxpayer in contributing share to pay expenses

debt

-based on contract -assignable -payable in kind/ money -no imprisonment -interest depending on the stipulation of the parties

equitable recoupment (doctrine of tax)

-claim for refund -maybe allowed to use for unsettled tax liabilities if both taxes arises from the same transaction -when refund of tax is due has already barred by prescription

Toll (not tax)

-compensation for someone else's property -maybe done with gov't/ individuals

sources of tax laws

-constitutions -tax treaties -statutes and laws -presidential decrees -executive orders -court decisions -revenue regulations -admin issuances -BIR ruling -Local Tax ordinances

2 types of double taxation

-direct -indirect

classification of taxes (who bears burden)

-direct tax -indirect tax

classification of taxes (purpose)

-fiscal/ general/ revenue tax -regulatory/ special/ sumptuary tax

personal/poll/capitation

-fixed amount -imposed to individual within situs

license fee (not tax)

-from police power of state -regulatory purpose -fee limited to necessary of regulation - imposed on exercise of right - non-payment makes business illegal

2 systems of income taxation

-global system -schedular system

penalty (not tax)

-imposed to regulate conduct through punishment -government/ individuals -from contract/ law -pain in money/ in kind

nature and characteristics of taxation

-inherent power -essentially legislative in function -has inherent and constitutional limitations -public purpose -strongesst of all inherent powers -subject to international treaty and comity -payable in money -territorial in scope

indirect double taxation

-legal -imposed on different authorities

special assessment (not tax)

-levied on land -land answers for liability -based on benefits received -application for recovery of cost/ maintaining improvement

tax capitalization

-make prices of goods lower to pass burden to buyer -reduction of SP of incoming-producing property by an amount equal to the capitalized value of future taxes that may be paid by the purchaser.

classification of taxes (jurisdiction/scope of authority)

-national tax -local tax

theories of taxation

-necessity theory -lifeblood doctrine

manifestation of lifeblood doctrine

-no estoppel against the government -collection of taxes cannot be stopped by law order -taxes not subject to compensation -valid taxes may destroy taxpayers property -right to select objects for taxation

levying/ imposition

-passage of tax laws/ ordinances through LEGISLATURE

classification of taxes (subject matter)

-personal/poll/capitation -property tax -excise tax

inherent powers of state

-power to tax -police power -eminent domain

direct double taxation

-prohibited -must be the same: >authority >jurisdiction >purpose >year >kind/character xamount (NOT)

classification of taxes (rate)

-proportional/ flat rate -progressive/ graduated tax -regressive tax

compensatory purpose of tax

-reduction of social inequality -economic growth -protect local industries from unfair competition

purpose to taxation (secondary)

-regulatory purpose -compensatory purpose

classification of taxes (determination of amount)

-specific tax -ad valorem tax

exemption grants

-strictly construed against person/ entity exclaiming exemption -claim must be justified by clear/ positive grant

scope of taxing power

-tax most absolute of all government powers -broadest powers of all powers

tax laws in case of doubt

-tax statutes/ law - favor taxpayers -tax exemptions - favor government

taxpayer's suit

-taxpayer's right to sue officers, boards, commissions to recover money wrongfully spent - only allowed if act involves direct and ilegal disbursement of public fund from taxation

Escapes from taxation

1. evasion/ dodging 2. avoidance 3.. shifting 4. capitalization 5. transformation 6. exemption

PRINCIPLES OF A SOUND TAX SYSTEM

1. fiscal adequacy 2. administrative feasibility 3. theoretical justice

stages/ aspect of taxation

1. levying/ imposition 2. assessment and collection 3. payment of taxes

what matters should be included in making taxes?

1. subject/ object to tax 2. purpose of tax 3. amount/ rate of tax 4. kind of tax 5. apportionment of tax 6. situs of tax 7. manner/ method collection

who assesses and collects taxes?

BIR / bureau of customs

Does prohibition of delegation by state of power prohibit BIR to modify rules for filing and payment?

No. BIR is allowed to modify such rules

do barrios have power to tax?

No. Barrios do not. Barangay's are the lowest org

Would ordinance taxes be affected if there's only one person within the city with such occupation? (defendant says it is discriminatory because he's the only one affected)

No. The ordinances only tax the occupation itself and not the person. The number of persons exercising the occupation is immaterial. Also, ordinance will also be imposed on other people with the same occupation in the future.

application of tax laws

PROSPECTIVE -exception: when statute expressly declared retroactively

Uniformity of taxation

Same rate shall be imposed on all taxable persons or property of the same tax

Non-delegation of legislative power

Since power of taxation is delegated to congress, congress cannot redelegate the power

Equality of taxation

Those who have more income should pay morr taxes while minimum wage earners should be exempt

Test for exemption of property tax

Use. Not ownership. Even if the real property is not owned by the school, exempt for property is provoded as long as it is used actually, directly, exclusively for educational purposes

lifeblood doctrine

Without taxes, the government would be paralyzed for lack of motive power to activate or operate it.

Can inherent limitation be disregarded with use of constitutional limitation?

Yes. Constitutional > Inherent

Are all revenues of non-stock, non-profit educational institutions EXEMPT from taxes and duties?

Yes. Revenue are exempt from income tax as long as it is used actually, directly and, exusively for educational purposes

subsidy

aid by government to help individual/commercial enterprise deemed beneficial to the public

global system

all gross income and deductions reported in one ITR applicable tax rate applied

indirect tax

allowed to transfer burden

local taxes

authority: delegated power nature: tax ordinances through the local legislative branch process: >levying - the legislative branch of lgu >assess/collect - treasurer

national taxes

authority: inherent power nature: tax laws congress and senate process: >levying - congress >assess/collect - BIR & BOC

theoretical justice

based of taxpayers ability to pay; progressive system -equality

specific tax

based on volume, weight or quantity of goods -based on value of property subject to tax

Basis of taxation

benefits-protection theory

direct tax

burden cannot be passed

local tax

by municipal corporations

administrative feasibility

convenient, just and, effective administration

schedular system

different types of income, different taxes

regulatory purpose of tax

employed as devise for regulation or control

necessity theory

existence of a government is a necessity

express/ affirmative exemption

expressly written in constitutions, statutes, treaties, ordinances, franchises or contracts

budget deficit

gov't revenue < gov't expenditures

budget surplus

gov't revenue > gov't expenses

tax transformation

higher production to lower cost and make taxes gain

tax evasion/ dodging

illegal unlawful means to evade taxes

tax exemption

immunity to pay tax

property tax

imposed to real/ personal property

tariff

imposing duties on importation and exportation of goods

regulatory/ special/ sumptuary tax

intended to achieve social/ economic goals

Who makes tax laws?

legislative department

if loan was given to the Philippines from japan given that the taxes won't be imposed on japanese institutions, which basic characteristic of taxation is being violated?

legislative in character. exemption can only be granted according to legislation

fiscal/ general/ revenue tax

levied without specific purpose

national tax

national gov't

are local taxes needed to be uniform with other local taxes of a political subdivision?

no. local taxes imposed by lgus will depend on the ordinances they have imposed

power to tax is power to destroy. is that always so?

no. supreme court may nullify tax law so that property rights are not affected

Actual, Direct and Exclusive use of property for charitable institutions

only to direct and immediate actual application of its purpose are exempted

tax shifting

passing the tax burden to another party

police power

promote public welfare by resstraining/ regulating use of liberty or property

purpose to taxation (primary)

raise revenue for gov't expenses

benefits-protection theory

reciprocal duties of government nd its inhabitants for duties of its protection and support

fiscal adequacy

sufficient to meet government expenses and public needs -certainty

eminent domain

take private property for public purpose

excise tax

tax for rights and privileges

custom duties (not tax)

tax imposed on imported/ exported goods

implied/ exemption by omission

tax levied on certain classes of persons without mentioning other classes

internal revenue

taxes imposed by legislature (except imports/ exports)

set-off taxes

taxes not subject to legal compensation because the government and taxpayer are not debtor and creditor of each other

locus standi

taxpayer can question validity of tax measures and illegal expenditures of public money

tax avoidance

the use of legitimate methods to reduce one's taxes

proportional/ flat rate tax

uses single rate

progressive/graduated tax

↑base ↑ rate

Regreessive tax

↓base ↑rate