Income Taxation Chap3

what are the three inherent power of the state

1. police power

2. taxation power

3. power of eminent domain

it is the power of the state for promoting public welfare by restraining and regulating the use of liberty and property

police power

of three inherent powers, the authority in this powers can be granted to public service or utility companies

power of eminent domain

the benefits on this inherent power is not direct and immediate

police power

what are the two purposes of taxation

1. primary ( revenue or fiscal purpose)

2. secondary (regulatory purpose: compensatory/statutory)

taxes are the lifeblood of the government and their prompt and certain availability is an imperious need

life blood doctrine

taxes are what we pay for civilized society

doctrine of symbiotic relationship

what are the five manifestation of the life blood theory

1. rule of no estoppel against the government

2. collection of boxes cannot be enjoyed by injunction

3. taxes could not be subject of compensation or setoff

under manifestation of life blood theory this means that performance of government functions the state cannot be stopped by neglect of its agents and erroneous application and enforcement of law

rule of no estoppel against government

under manifestation of the lifeblood theory no court except the ____ shall have the authority to grant an injunction to restrain the collection of any national internal revenue tax

court of tax appeal

• taxes should not be delay

under manifestation of life blood theory why is taxes cannot be subject of compensation or setoff.

Exception

because taxes is not a debt or contract and government and taxpayer is not a mutual creditor and debtor

exception is when government and taxpayer has claim does already due, demandable, and fully liquidated

the right to select the objects or subjects of taxation results with the ___. the matter that legislature is competent of are:

congress

1. subject and object to be tax

2. purpose of tax

3. amount of rate of the tax

4. kind of tax

the power to tax includes the power to destroy where the tax is

valid tax

what are the four scope of the power to tax

• comprehensive. it covers persons, business, properties, rights, profession

• unlimited.

• plenary. complete

• supreme

what are the six essential elements of tax

• it is enforced contribution

• payable in money

• proportionate in character

• levied on persons,property, or excise

• levied y law making body of state

• levied for public purposes

what are the three aspects of taxation

1. levying

2. assessment

3. collection

give example of those exempted to tax

gsis, sss, sanwad, pag-ibig

classification of taxes as to scope

national and local. local governments power to tax is from constitutional grant and is not inherent

classification of taxes as to subject matter or object

personal/poll/capitation- fixed, for citizens or not

property- real or personal

excise - certain right and privilege. sin products

classification of taxes as removers the burden

direct and indirect

classification of tax as to determination of amount

specific. tax of fixed amount imposed by the head or number or by some standard or weight of measure

ad valorem. tax of fixed proportion of the value of the property

classification of tax as to graduation or rate

1. proportional. tax base is fixed percentage

2. progressive or graduated. a stocks based increase tax rate increase

3. regressive. as tax based increase tax rate decrease

taxes are imposed under national internal revenue code through

bureau of internal revenue

what are the three elements of sound tax system

1. fiscal adequacy

2. theoretical justice or equity- ability to pay principle

3. administrative feasibility

these are restrictions arising from the very nature of the power to tax itself

inherent limitations

give constitutional limitations

1. due process law

2. equal protection of laws

3. rule of uniformity and equity in taxation

4. prohibition against imprisonment for non-payment of poll tax

5. prohibition against impairment of obligations of contact

6. prohibition against infringement of religious freedom

7. prohibition against appropriation of proceeds of taxation for the use, benefit, or support of any church

8. prohibition against taxation of religious, charitable, and educational entities (real properties only)

9. prohibition against taxation of non-stock, non-profit, educational institution

other constitutional law

1. grant of tax exemption

2. power of president to veto

3. infringement of press freedom

4. revocation of tax exemptions

this means the place of taxation

situs of taxation. imposed particular tax

this is some of money for the use of something, generally applied to the consideration, which is paid of the use of road bridge or the like of public nature

toll. demand of proprietorship and paid for the use of another's property

it is a sanction imposed a spanishment for violation of law or acts theme injurious. it is designed to regulate conduct

penalty

it is an enforced proportional contribution from owners of lands for special benefits resulting from public improvements

special assessment. not a tax measure

these are funds or income derived by the government whether from tax or any other source

revenue.

revenue is amount collected

tax is amount imposed

it is a pecuniary a directly granted the government to an individual or private commercial enterprise deemed beneficial to the public

subsidy. not a tax

this is charged imposed under police power for purpose of regulation

license fee or permit

these are taxes imposed on goods exported from or imported into country

custom duties

what is the difference between dept and tax

• debt is based on contract while tax is based on law

• debt is payable in any kind while tax is payable only in money

• tax is not assignable or subject to set of or compensation

• tax does not draw interest except when delinquent

this is book of rates drawn usually names of several kinds of merchandise with corresponding duties to paid for the same

tariff

double taxation strict and broad sense

strict- direct duplicate taxation

broad- indirect double taxation

this is taxing twice by same taxing authority, for the same purpose, in the same year, in the same subject, and same kind

direct double taxation

what are six means of avoiding tax

1. shifting

2. transformation

3. tax evasion

4. tax avoidance

5. exemption

6. capitalization

this is transfer of burden of tax by original payer to the someone else. ex. vat and ad valorem

shifting

this is an escape from taxation where the producer or manufacturer pays the tax and endeavor to recoup himself by improving his process of production thereby turning out these units of product at lower cost

transformation

this is the use by taxpayer of illegal or fraudulent means to defeat or lessens the payment of tax also known as tax dodging

tax evasion

this is exploitation by the taxpayer of legally permissible alternative tax rates in order to avoid or reduce tax liability. it's tax saving device within the main sanction by law. call tax minimization

tax avoidance

what are the grounds of granting tax exemptions

1. maybe based on contract

2. based on some ground of public policy

3. maybe based on grounds of reciprocity or to lessen the rigors of international double or multiple taxation

kinds of taxation as to basis, to form, and to extend

basis: constitutional and statutory (by legislation)

form: express and implied

extent: total and partial

are tax presumed or not

no

it is general or intentional overlooking by the state of its authority to impose penalties on persons otherwise guilty of evasion or violation of revenue or tax law. it is an absolute forgiveness or waiver of the government of right to collect. it is a way to give tax evaders chance to do so

amnesty. immunity from all criminal, civil, and administrative liabilities from non-payment of taxes

it is a reduction in selling price of income producing property by an amount equal to the capitalized value of future tax that may be paid by the purchaser

capitalization

what are the sources of tax laws

1. philippine constitution

2. tax treaties and international government

3. tax code

4. tariff and custom code

5. local government code

6. local tax ordinances (city or municipal code)

7. other special laws

8. decision of supreme court and court of tax appeal

9. revenue rules and regulation and administrative rulings and opinions

requisites for validity of rules and regulations

1. does not contradict law and the constitution

2. publish to the official gazette or newspaper of general circulation

are internal revenue law political in nature

no

it is one brought or filed by a taxpayer arguing the validity of tax statute and its enactment or the constitutionality of its alleged public purpose

taxpayers suit