Introduction to Taxation – Key Vocabulary

Vocabulary flashcards covering fundamental concepts, doctrines, limitations, and principles introduced in Chapter 1: Introduction to Taxation.

Taxation

Inherent power and legislative process by which the State imposes proportional contributions on its subjects to raise revenue for public purposes.

Territoriality of Taxation

Inherent limitation stating that a State may tax only persons, property, or transactions within its jurisdiction, except where the law expressly provides otherwise (e.g., resident citizens taxed on worldwide income).

International Comity

Principle of mutual courtesy among sovereign states under which governments avoid taxing other governments' income or property and honor treaty obligations over domestic tax laws.

Public Purpose (Taxation)

Requirement that taxes be imposed exclusively to benefit the community at large and never to further purely private interests.

Exemption of the Government

Doctrine that government property and income from essential public functions are generally free from tax, though profits from proprietary activities may be taxed.

Non-Delegation of the Taxing Power

Inherent limitation that the power to tax rests in Congress and may not be delegated, except to local governments, the President (tariff powers), or for purely administrative implementation.

Due Process in Taxation

Constitutional guarantee that tax impositions must rest on valid law (substantive) and be assessed/collected with notice and hearing under prescribed procedures (procedural).

Equal Protection (Taxation)

Rule that taxpayers in similar circumstances must receive identical rights and burdens; discrimination between similarly situated taxpayers is forbidden.

Uniformity Rule

Constitutional mandate that taxes be uniform and equitable within each class, meaning relative equality based on substantial distinctions.

Progressive System of Taxation

Constitutional directive that tax rates increase as the tax base increases, reflecting the taxpayer’s ability to pay and promoting wealth distribution.

Non-Imprisonment for Debt or Poll Tax

Guarantee that no one is jailed for inability to pay private debt or the basic community tax; does not extend to other tax delinquencies.

Non-Impairment of Obligation and Contract

Limitation preventing the State from revoking tax exemptions or other contractual obligations unilaterally when granted by contract.

Free Worship Rule

Prohibition on taxing the exercise of religion; revenues and properties devoted to religious purposes are tax-exempt unless used commercially.

Property Tax Exemption for Religious/Charitable Entities

Constitutional exemption for lands, buildings, and improvements actually, directly, and exclusively used for religious, charitable, or educational purposes.

Non-Appropriation for Religious Purposes

Bar against using public funds or property to benefit any church, sect, or system of religion, upholding separation of Church and State.

Tax Exemption for Non-Profit, Non-Stock Educational Institutions

Constitutional privilege exempting revenues and assets devoted actually, directly, and exclusively to educational purposes from tax.

Concurrence Requirement for Exemption Laws

Passage of a tax-exemption law needs an absolute majority vote of all members of Congress; its withdrawal needs only a simple majority of quorum.

Non-Diversification of Tax Collections

Mandate that tax revenues be applied solely to public purposes and not diverted to private ends.

Supreme Court Review of Tax Cases

Constitutional protection ensuring the Supreme Court’s final appellate jurisdiction over all tax controversies despite the Court of Tax Appeals.

Origination Clause (Tax Bills)

Rule that revenue, tariff, or appropriation bills must originate in the House of Representatives, though the Senate may propose amendments.

Local Government Taxing Power

Express constitutional delegation allowing LGUs to create their own revenue sources and share in national taxes to foster fiscal autonomy.

Benefit Received Theory

Cost-allocation concept that those enjoying more government benefits should contribute more taxes.

Ability to Pay Theory

Principle that tax burden should correlate with a taxpayer’s capacity to sacrifice; forms the basis for progressive taxation.

Vertical Equity

Aspect of ability-to-pay requiring that taxpayers with larger bases (e.g., income, wealth) pay more tax in absolute terms.

Horizontal Equity

Aspect of ability-to-pay requiring similar tax burdens on taxpayers with equal economic capacity, after considering their individual circumstances.

Lifeblood Doctrine

View that taxes are essential to government existence, leading to strict construction against exemptions and prohibition on court interference with collection.

Police Power

Inherent State power to enact laws protecting health, safety, morals, and general welfare of the people.

Eminent Domain

State power to take private property for public use upon payment of just compensation.

Direct Double Taxation

Taxing the same taxpayer twice by the same jurisdiction, on the same property or activity, for the same purpose and period.

Indirect Double Taxation

Situation where at least one secondary element of direct double taxation differs (e.g., different taxing authorities), still causing overlapping burdens.

Tax Evasion

Illegal schemes or misrepresentations undertaken to defeat or reduce tax liability; also called tax dodging.

Tax Avoidance

Use of legally permissible means or arrangements to minimize or escape tax burden; also called tax minimization.

Tax Exemption

Legislative, constitutional, or contractual grant freeing a person or property from a tax which others must pay; may be revoked except when constitutionally or contractually protected.

Tax Shifting

Transfer of tax burden from the statutory taxpayer to another party through price adjustments (forward, backward, or onward shifting).

Capitalization (Tax)

Adjustment in asset value reflecting anticipated tax burdens, effectively embedding the tax cost in the purchase price.

Transformation (Tax)

Absorbing a tax by increasing efficiency or eliminating waste, so that savings offset the tax rather than passing it on.

Tax Amnesty

General pardon forgiving past tax liabilities—civil and criminal—upon compliance with stated conditions; retrospective in effect.

Tax Condonation

Selective forgiveness or remission of an assessed but unpaid tax, canceling only the civil liability and operating prospectively.

Marshall Doctrine

Maxim that "the power to tax involves the power to destroy," highlighting tax’s potential as a regulatory or prohibitive tool.

Holmes Doctrine

Counter-maxim that taxation is not the power to destroy while the courts sit; taxes can also encourage beneficial activities (e.g., through incentives).

Situs of Taxation

The place or jurisdiction that has the authority to impose tax on a given person, property, or transaction (e.g., location of property, place of sale, residence).

Non-Compensation or Set-Off

Rule that tax liabilities cannot be offset against claims the taxpayer has against the government; taxes must be paid independently.

Imprescriptibility in Taxation

Concept that the State’s right to collect tax does not prescribe unless a statute explicitly provides a prescriptive period (e.g., NIRC assessment/collection limits).

Government Not Estopped

Doctrine that erroneous acts or opinions of tax officials do not bind the State; the government may correct mistakes despite prior misrepresentation.

Judicial Non-Interference

Courts generally may not enjoin tax collection, preserving the lifeblood of the State and ensuring prompt revenue flow.

Strict Construction of Tax Laws

Principle that tax statutes are construed strictly against the government only when ambiguous; exemptions, however, are strictly construed against the taxpayer.

Vague Tax Law Doctrine

If a tax or exemption provision is unclear, it is deemed void as to taxes (favoring taxpayer) or void as to exemptions (favoring government).