TAXATION PART 1

taxation

inherent power of the state intended eto raise revenue to finance government expidentures

manifestation of the lifeblood theory

a. rule of no estoppel against the government

b. collection of taxes cannot be enjoined/stopped by injunction

c. taxes could not be the subject of compensation or set-off

d. right to select objects/subjects of taxation

e. a valid tax may result in the destruction of the taxpayer’s property

taxation

• exercised only by the government

• property is taken to support the government

• group or class of individuals

• becomes part of public funds

• no limit on the amount of tax

police power

• exercised only by the government

• property is taken or destroyed to promoted public welfare

• group or class of individuals

• there is restrain on injurious use of power; no transfer of ownership

• amount is limited to cover the cost of license and expenses of regulation

eminent domain

• granted also to public service companies or public utilities

• property is taken for public use

• individuals as the owner of a particular property

• there is transfer of right or ownership

• there is no imposition; the property owner is paid the fair market value of the property taken

executive

assessment and collection (bureau of internal revenue; bureau of customs)

legislative

• congress of the philippines ( house of representatives and senate)

• lecy (only legislative can impose taxes)
  

judiciary

decides on tax cases (court of appeals, and supreme court, elevated on appeal)

nature of internal revenue laws

• internal revenue laws are not political in nature

• tax laws are civil and not penal in nature

scope of the state’s power of taxation

• comprehensive

• unlimited

• plenary

• supreme

comprehensive

as it covers persons, businesses, activities, professions, rights, and priveleges

unlimited

in the absence of limitations prescribed by law or the constitution, the power to tax is unlimited and comprehensive

plenary

as it is complete; bir may avail of certain eremedies to ensure collection of taxes

supreme

in so far as the selection of the subject of taxation

limitation of taxation

subject to limitations enumerated in the consitution and the will of the legislatures

inherent limitations

• levied for public purpose

• international comity

• non-delegation of the power to tax

• exemption from taxation of government entities

• territoriality

consitutional limitations

• due process of law

• equal protection of the laws

• exemption from real property tax of charitable insitutions, churches, paronages or convents appurtant thereto, mosques, and non-profit cemeteries, and all lands, buildings, and improvement actually, directly and exclusively used for religious or charitable purposes

• exemption from income taxes, real estate taxes and customs duties of non-stock, non-profit educational purposes

• non-imprisonment for non-payment of poll tax

• non-impairment of obligations and contracts

• rule of taxation shall be uniformed and equitable

2 types of double taxation

1. direct duplicate

2. indirect duplicate

direct duplicate

• taxing twice the same subject matter

• within the same period for the same purpose

• within the jurisdiction of the same taxing authority

indirect duplicate

• not all the requisites of direct duplicate double taxation is present

• extends to all cases in which there is burden of two or more pecuniary impositions

principles of sound tax system

1. fiscal adequacy

2. administrative feasibility

3. theoretical justice (equality)

fiscal adequacy

revenue must be sufficient to meet the demands of public expenditures

administrative feasibility

capable of convenient, just and effective administration

theoretical justice (equality)

based on ability to pay

characteristics of tax

• enforced contribution

• generally payable in money

• proportionate in character

• levied on persons, property, or exercise of right or privelege

• levied by state which has jurisdiction over the subject of object of taxation

• levied by lawmaking body of the state

• levied for public purpose

classification of taxes

1. personal, poll or capitation tax

2. property tax

3. excise or privelege tax

personal, poll or capitation tax

imposed on persons residing within a specified territory without regard to their property or occupation (community tax)

property tax

tax on property whether real or personal (real estate tax)

excise or privelege tax

imposed upon the performance of an act, enjoyment of privelege, or engaging in an occupation

specific

fixed amount by head, number or some standard of weight or measurement (excise tax on distilled spirits, wines, or liquors)

ad valorem

based on the value of the subject matter assessed (real estate tax)

general, fiscalor revenue

imposed to raise revenue for the general purposes of the government

special or regulatory

imposed for special purposes (customs duties)

national

imposed by national government (internal revenue taxes, ccustoms duties)

municipal or local

imposed by local government units (sand and gravel tax, occupation tax)

proportional

based on fixed percentage of property, receipts or other basis to be taxed (vat)

progressive

rate increases as the tax base increases (income tax)

regressive

rate decreases as the tax base increases

tax

a demand of sovereignity based on necessity imposed only by the government for its support

toll

a demand of propprietorship based on cost of construction or maintenance of public improvement paid for the use of another’s property. Imposed by government, private individuals or entities.

license

involves exercise of police power imposed for regulation which amount is limited to expenses of regulation; failure to pay makes the act or business illegal

debt

based on contract which may be paid in money or in kind and can be subject of assignment. no imprisonment for non payment of debt

income (situs of taxation)

place is where the same is earned, citizenship or residence of the owner

business or occupation (situs of taxation)

place where the business is conducted, place where the occupation is practiced; or the place where the transaction took place

real and tangible personal property (situs of taxation)

location of property

gratuitous transfer of property ((situs of taxation)

residence or citizenship of the taxpayer

tax evasion

• also known as tax dodging

• illegal or fraudulent means

• to defeat or lessen

• payment of tax

tax avoidance

• also known as tax minimization

• legal way or means of reducing tax liability

sources of tax laws

• constitution

• internal revenue code

• tariff and customes code

• local govt code

• local tax ordinances

• tax treaties/international agreements

• special laws

• decision of supreme court/court of tax appeals

• revenue rules and regulations & administrative rulings and opinions

tax laws

are construed liberally in favor of the taxpayer and strictly against the government

tax exemptions and deductions

are strictly construed against the taxpayer and liberally in favor of the government

amnesty

the general or intentional overlooking by the state of its authority to impose penalties on persons otherwise guilty of evasion or violation of a tax law.