Taxation Lecture Notes

Flashcards about taxation

What is the definition of taxation?

An act, process, or means by which the Sovereign makes demand for revenue to support its existence and objectives.

What is the Revenue Purpose of Taxation?

To fund government operations and public services.

What is the Regulatory Purpose of Taxation?

To control inflation, stabilize the economy, and influence social behavior.

What is the Compensatory Purpose of Taxation?

To compensate for benefits received (e.g., toll fees).

What does 'Inherent Power of Sovereignty' mean in the context of taxation?

The government can exercise the power even without any provisions in the Constitution mentioning it.

What does 'Legislative Function' mean in the context of taxation?

Only the law-making body can impose taxes.

What does 'For Public Purpose' mean in the context of taxation?

Taxes must benefit the general public.

Why is taxation considered the 'Strongest Power of the State'?

Essential for government survival.

What does 'Territorial in Scope' mean in the context of taxation?

Applies only within a country’s jurisdiction (unless exceptions exist).

What does 'Subject to International Comity' mean in the context of taxation?

Foreign governments are exempt from taxation as a matter of courtesy.

What does 'Payable in Money' mean in the context of taxation?

Taxes are monetary contributions.

What is taxation (as one of the inherent powers of the State)?

Power to impose taxes for public purposes.

What is Eminent Domain (as one of the inherent powers of the State)?

Power to take private property for public use with just compensation.

What is Police Power (as one of the inherent powers of the State)?

Power to regulate behavior for public welfare.

What is the Purpose of Taxation?

Raise revenue.

What is the Purpose of Police Power?

Promote public welfare.

What is the Purpose of Eminent Domain?

Take property for public use.

Who has the Authority for Taxation?

Only government.

Who has the Authority for Police Power?

Only government.

Who has the Authority for Eminent Domain?

May be delegated.

What Compensation is required for Taxation?

No direct compensation.

What Compensation is required for Police Power?

No compensation.

What Compensation is required for Eminent Domain?

Just compensation required.

Can the power of taxation be delegated?

Cannot be delegated.

Can Police Power be delegated?

Can be delegated.

Can Eminent Domain be delegated?

Can be delegated.

What is the Theory of Taxation?

Every government provides a vast array of public services including defense, public order and safety, health education and social protection among others.

What is the Benefit Received Theory of Taxation?

Those who benefit more from government services should pay more taxes.

What is the Ability to Pay Theory of Taxation?

Taxes should be based on the taxpayer’s capacity to pay.

What is the Lifeblood Doctrine of Taxation?

Taxes are essential for government survival; without them, the government cannot function.

What is 'Public Purpose' as an inherent limitation of taxation?

Taxes must benefit the public.

What is 'Non-Delegation of the Power to tax' as an inherent limitation of taxation?

Only the legislative body can impose taxes.

What is 'Exemption of Government Agencies or Instrumentalities from Taxation' as an inherent limitation of taxation?

Government entities are tax-exempt unless engaged in proprietary functions.

What is 'International Comity' as an inherent limitation of taxation?

Foreign governments are exempt.

What is 'Territorial Jurisdiction' as an inherent limitation of taxation?

Taxes apply only within the country’s borders.

What is 'Due Process & Equal Protection' as a Constitutional Limitation of taxation?

Taxes must be fair and non-discriminatory.

What is 'Uniformity & Equity' as a Constitutional Limitation of taxation?

Taxes must be uniform within the same class and equitable based on ability to pay.

What is 'Non-Imprisonment for Poll Tax' as a Constitutional Limitation of taxation?

No jail for unpaid poll taxes.

What is 'Non-Impairment of Contracts' as a Constitutional Limitation of taxation?

Taxes cannot invalidate contracts.

What is 'Non-Infringement on Religious Freedom' as a Constitutional Limitation of taxation?

Churches and religious institutions are tax-exempt.

What is 'Public Money for Public Use' as a Constitutional Limitation of taxation?

Taxes must fund public projects.

What is the Levy or Imposition (Impact of Taxation) stage of taxation?

Legislative enactment of tax laws.

What is the Assessment & Collection (Incidence or administrative of Taxation) stage of taxation?

Administrative implementation (e.g., BIR collecting taxes).

What is the Situs of taxation for Business Tax?

Where the business operates.

What is the Situs of taxation for Income Tax (Services)?

Where services are rendered.

What is the Situs of taxation for Income Tax (Goods)?

Where the sale occurs.

What is the Situs of taxation for Property Tax?

Where the property is located.

What is the Situs of taxation for Personal Tax?

Taxpayer’s residence.

What are the elements of Double Taxation?

Same object, same type of tax, same purpose, same jurisdiction, same tax period.

What is Direct Double Taxation?

All elements are present.

What is Indirect Double Taxation?

At least one element differs.

How can double taxation be counteracted?

Tax exemptions, foreign tax credits, treaties/reciprocal agreements.

What is Tax Evasion?

Illegal (e.g., underreporting income).

What is Tax Avoidance?

Legal (e.g., using deductions).

What is Tax Exemption?

Immunity granted by law.

What is Shifting?

Passing tax burden to another (e.g., seller to buyer).

What is Capitalization?

Adjusting asset values to reflect tax impact.

What is Transformation?

Absorbing taxes by improving efficiency.

What are Forms of Tax Avoidance?

Tax option (choosing lower rates), shifting, exemption claims.

What is the Marshall Doctrine?

“Power to tax involves the power to destroy.”

What is the Holmes Doctrine?

“Taxation is not the power to destroy while courts sit.”

What is Prospectivity?

Tax laws apply to future transactions.

What is Non-Compensation?

Taxes cannot be offset by government debts.

What is Non-assignment of taxes?

Contracts executed by the taxpayer to such effect shall not prejudice the right of the government to collect.

What is Imprescriptibility?

Government can collect taxes indefinitely unless the law states otherwise.

What is Strict Construction?

Tax exemptions are interpreted narrowly.

What is the definition of Taxes?

Compulsory contributions levied by the government on individuals, properties, or transactions to generate public revenue.

What does Jurisdiction mean in the context of a Valid Tax?

Imposed by a taxing authority with legal power.

What does Constitutional Compliance mean in the context of a Valid Tax?

Must not violate constitutional/inherent limits.

What does Uniformity & Equity mean in the context of a Valid Tax?

Applied equally within the same class.

What does Public Purpose mean in the context of a Valid Tax?

Funds must benefit the public.

What does Proportionality mean in the context of a Valid Tax?

Based on ability to pay.

What does Payable in Money mean in the context of a Valid Tax?

Taxes are monetary (not in kind).

What is Revenue/Fiscal Tax?

Primary goal is funding government operations (e.g., income tax).

What is Regulatory Tax?

Used to influence behavior (e.g., sin taxes on alcohol).

What is Personal/Poll Tax?

Fixed amount per person (e.g., community tax).

What is Property Tax?

Based on property value (e.g., real estate tax).

What is Excise Tax?

On privileges/acts (e.g., VAT, estate tax).

What is Ad Valorem Tax?

Based on value (e.g., 12% VAT).

What is Specific Tax?

Fixed amount (e.g., ₱10/liter on gasoline).

What is Direct Tax?

Paid by the taxpayer (e.g., income tax).

What is Indirect Tax?

Passed to another (e.g., VAT absorbed by consumers).

What is National Tax?

Imposed by the national government (e.g., income tax, VAT).

What is Local Tax?

Imposed by LGUs (e.g., real property tax, business permits).

What is Proportional Tax?

Fixed Rate.

What is Progressive Tax?

Rate increases with tax base.

What is Regressive Tax?

Rate decreases as base increases.

What is Digressive Tax?

Rate decreases after a threshold.

What is a Tax?

Mandatory, no direct benefit.

What is a License Fee?

Payment for regulation (not revenue).

What is a Toll?

Fee for using property/roads.

What is a Debt?

Arises from contracts.

What is a Special Assessment?

For Public Improvements.

What is a Tariff?

Tax on Imports.

What is a Subsidy?

Government aid to support industries.

What is Tax Law?

Laws governing tax imposition, assessment, and collection (e.g., National Internal Revenue Code/NIRC).

What is Civil Tax Law?

Aimed at compliance, not punishment.

What is Prospective Tax law?

Apply to future transactions only.

What is Literal Enforcement?

Applied as written.

What is 'No Presumption of Tax' mean in tax law?

Burden must be clear.