CHAPTER 1 FUNDAMENTAL PRINCIPLES OF TAXATION

Flashcards covering key concepts from Chapter 1: Fundamental Principles of Taxation.

Taxation is the act of levying a tax to apportion the cost of government among those who, in some measure, are __ to enjoy its benefits.

privileged

Taxation is the process by which the sovereign, through its law-making body, imposes burdens upon subjects and objects within its jurisdiction for the purpose of raising .

revenues

Three Inherent Powers of the State are: 1) __ 2) Police Power 3) Eminent Domain.

taxation

The power of the state to promote public welfare by restraining and regulating the use of liberty and property is the __.

Police power

The power of the state to acquire private property for public purposes upon payment of just compensation is the __.

eminent domain

Similarities among inherent powers include that they are inherent powers; They exist independently from constitutional provisions; They interfere with private rights and properties; They are __ in nature and character.

legislative

The primary purpose of taxation on the part of the government is to provide funds or property with which to promote the general welfare and to enable it to __ its multifarious activities.

finance

Secondary: Regulatory (sumptuary/ compensatory) uses of taxation include a) Promotion of General Welfare; b) Reduction of Social Inequality; c) Economic Growth. The blank example is a) Welfare.

General

The Lifeblood Doctrine states 'Taxes are the of the government and their prompt and certain availability is an imperious need.'

lifeblood

Necessity Doctrine states it is a power emanating from __.

necessity

Basis of Taxation includes the Benefits Received Theory or the __ Theory.

Reciprocity

SCOPE OF THE POWER TO TAX: – as it covers persons, businesses, activities, professions, rights and privileges.

Comprehensive

The national agency charged with the function of collecting internal revenue taxes is the __.

Bureau of Internal Revenue

ESSENTIAL ELEMENTS OF TAX: It is an contribution.

enforced

ESSENTIAL ELEMENTS OF TAX: It is generally payable in money; it must be in legal .

tender

ESSENTIAL ELEMENTS OF TAX: It is in character; the use of a graduated tax rate is in consonance with this rule.

proportionate

ESSENTIAL ELEMENTS OF TAX: It is levied on persons, property, or the exercise of a right or (subjects or objects of taxation).

privilege

ESSENTIAL ELEMENTS OF TAX: The power of imposing a tax is a purely function.

legislative

ESSENTIAL ELEMENTS OF TAX: It is levied for public .

purpose

ASPECTS OF TAXATION: Levying is a(n) act; Assessment is a(n) function; Collection is a(n) function.

legislative; executive; administrative

NATURE OR CHARACTERISTICS: The power to tax is the among the inherent powers.

strongest

CLASSIFICATION OF TAXES as to Authority or Scope: Local taxes include tax.

Community

As to Object: Excise Tax is a tax that embraces any form of burden not laid directly upon person or .

property

VAT is a form of sales tax; It is an indirect tax levied upon the consumption of the sale of goods and services and on imports of .

goods into the country

DIRECT TAX vs INDIRECT TAX: Direct Tax is demanded from an individual who tends to buy or purchase a good or service; Indirect Tax is paid by a person who can the burden upon someone else.

shift

AS TO DETERMINATION OF AMOUNT: Specific Tax is a fixed sum; Ad Valorem Tax is fixed proportionate with the value and requires the intervention of before the amount due.

assessors

As to purpose: General Tax refers to the tax levied to an individual for a public purpose.

general

As to Rate or Graduation: Progressive/ Graduated rates mean a tax with a rate that with the tax base.

increases

Situs of Taxation: Factors include Residence of the taxpayer, Location; Place of sale or transaction; Domicile of the owner for intangible; Receivables: Domicile or residence of the .

debtor

Test in determining if the imposition is a tax or a license fee: If the purpose is primarily or revenue is at least one of the real and substantial purposes, then the exaction is a .

tax

Toll vs Tax: A Toll is a demand of (sovereignty); Tax is a demand of the government for revenue.

sovereignty

Penalty vs Tax: Penalty is designed to regulate conduct; Tax is primarily aimed at raising revenue.

public

Special Assessment is levied only on land and is based wholly on benefits; It is not a tax measure intended to raise for the government.

revenues

Tax versus Subsidy: Subsidy is a pecuniary aid directly granted to a private , and is not a tax, though tax may be imposed to pay it.

enterprise

Test: A Permit or License Fee is for regulation; Tax is for .

revenue

CUSTOMS: Customs duties are taxes imposed on goods from or imported into a country.

exported

DOUBLE TAXATION: Direct double taxation occurs when, by the same , jurisdiction or taxing district, for the same purpose, in the same year, on the same subject, and of the same kind.

authority

Shifting is the transfer of the burden of a tax by the original payer to someone else; Only taxes may be shifted.

indirect

Tax evasion connotes the integration of three factors: a) the end to be achieved; b) an accompanying state of mind described as 'evil' or 'bad faith'; and c) a course of action which is .

unlawful

Tax avoidance is the exploitation by the taxpayer of legally permissible alternative tax rates or methods of assessing taxable property or income in order to avoid or reduce tax liability; it is often called 'tax ' and is not punishable by law.

minimization

Exemption is the grant of immunity to particular persons or corporations from a tax; It is allowed only if there is a clear provision; Grounds for granting exemptions include contract, public policy, and reciprocity.

reciprocity

Capitalization is the reduction in the selling price of income producing property by an amount equal to the capitalized value of future taxes that may be paid by the .

purchaser

SOURCES OF TAX LAWS include the Philippine Constitution, tax treaties, the National Internal Revenue Code (NIRC), Tariff and Customs Code, Local Government Code, Local tax ordinances, other special laws, decisions of the Supreme Court, and revenue rules and regulations; A tax treaty has the force and effect of .

law

Amnesty involves immunity from all criminal, civil and administrative liabilities from non-payment of taxes; It is the general or intentional by the State.

overlooking