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Transcript of Philippine Taxation
3 Phases of taxation
3-fold Nature of T A X A T I O N
T A X A T I O N
1.Inherent power of state.
3.Subject to constitutional and inherent limitations.
G R O U P 6
WHY TO STUDY TAXATION?
This chapter introduces us to the basic elements of taxation as well as give us a background understanding of taxation as well as gives us a background understanding of how important taxation is, in any state of matter.
It is the life blood of any state. Without it the state cannot exist, discharge the necessary functions and deliver the important services to the people. For some, taxation is an additional burden that they do not like to pay. However, the conduct of social awareness regarding taxation should be taken into account. People should pay their share to the government so that the latter can perform its function effectively and efficiently in the delivery of services, both on social and infrastructure projects.
According to John Smith, as cited by Jose N. Nolledo (Principles of Agrarian Reforms, cooperatives and Taxation 2000), there are four canons for good taxation.
– taxation must be based on ability to pay.
– the amount to be paid, as well as the time and manner for payment, must be certain.
– the time for payment and the manner of collection must not be oppressive.
– the tax to be levied must be just enough to sustain the government and its function.
1. Levy or Imposition
this involves the impact of taxation
2. Assessment and Collection
the basic guidelines on the assessment and collection are laid down and the administrative authorities are responsible for the details in the collection of taxes
3. P a y m e n t
this is referred to as the incidence of taxation
Its primary purpose is to raise revenue or provide funds to promote the general welfare and protection of its citizens, and to enable the government to finance its multifarious activities.
It is also designed to satisfy the following objectives:
1.Equitably distribute the wealth of the nation,
referring to the case of estate and donor’s taxes.
2.Protect new industries in which the rate of taxation may be increased to regulate the proliferation of unnecessary industries and competition with foreign investments.
3.Uplift social conditions as in the case of regulatory taxes in the exercise of police powers through taxation.
is the inheret power of the state, acting through the legislature, to impose and collect revenues to support the government and its recognized objects.
D E F I N I T I O N O F
- enforced contribution, generally payable in money,property or property rights to raise revenue for the government and to finance all public needs
Characteristics of a Sound Tax System (Tax Commission of the Philippines 1939)
The sources of revenues must be adequate or enough to defray the expenses of the government and their variations.
The general principle should be that taxes must be based on the ability to pay.
The tax laws must be clear and concise. It must be capable of proper enforcement that is not burdensome and is convenient as to time and manner of payment. Anybody who is authorized to collect can do such function with ease.
Criteria for being administratively feasible:
1. Tax laws must be clear and concise.
2. It is capable of proper enforcement.
3. It is not burdensome.
THEORY OF TAXATION
Taxation proceeds from the theory that the existence of the government is a necessarily. Government operations depend largely on revenues sourced out from taxation. The government cant exist without paying its expenses. It, therefore, has the right to compel all citizens of the country to pay the amount due them. The Necessity for a government to exist is the theory that underlies the power of taxation. It is the reponsibility of the government to call upon the citizens of the country to assume monetary burden and pay taxes so that it can perform its functions, meet its widely expanding services and carry on its legal as well as constitutional function.
based on the purpose for which the amount is collected
HECTOR S. DE LEON
(AGRARIAN REFORM & TAXATION w/ COOPERATIVES and CARP, 1994)
As to subject matter
Personal, poll or capitation
- tax of a fixed amount imposed on individuals
Ex. Community Tax
- tax imposed on property whether real or personal
Ex. Real Estate Tax
- tax imposed on the performance of an act, enjoyment of a privilege or engaging in an occupation
Ex. Income Tax, donor's tax, value added tax
2. As to Purpose
General, fiscal or revenue
– tax with no particular purpose or object for which revenue is raised, but is simply raised for whatever need may arise.
Ex. Income tax, value added tax.
Special or Regulatory
– Tax imposed for a special purpose regardless of whether revenue is raised or not, and is intended to achieve some social or economic end.
Ex. Protective tariffs or customs duties on certain imported goods to protect local industries against foreign competition.
3. As to authority imposing the tax or scope
– tax imposed by the national government.
Ex. Internal revenue taxes, tariff and customs duties.
Municipal or local
– tax imposed by the national governments for specific needs.
Ex. Real estate taxes, municipal licenses
4. As to determination of amount
– Tax imposed based on a physical unit of measurement, as by head or number, weight, or length or volume.
Ex. Tax on wines, cigars, fireworks, etc.
– Tax of a fixed proportion of the value of property; needs an independent appraiser to determine its value.
Ex. Real Estate Tax, Gasoline Tax, etc.
5. As to who bears the burden
- Tax demanded from persons who are intended or bound by law to pay the tax.
Ex. Community tax, income tax, estate tax.
– tax which the tax payer can shift to another.
Ex. Value-added tax, customs duties.
6. As to graduation or rate
– tax based on a fixed percentage of the amount of property income or other basis to be taxed.
Ex. Percentage taxes, real estate taxes
Progressive or graduated
– tax rate increases as the tax base increases.
Ex. Income tax, estate tax, donor’s tax.
– tax rate decreases as the tax base increases.
Ex. Value-added tax.
Limitations on the Power of Taxation
is expressly found in the constitution or implied from its provisions
Article III Section 20.
No person shall be imprisoned for debt or non-payment of a poll tax.
Article VI Section 28.
(1) The rule of taxation shall be uniform and equitable. The Congress shall evolve a progressive system of taxation.
(2) The Congress may, by law, authorize the President to fix within specified limits, and subject to such limitations and restrictions as it may impose, tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the national development program of the Government.
(3) Charitable institutions, churches and parsonages or convents appurtenant thereto, mosques, non-profit cemeteries, and all lands, buildings, and improvements, actually, directly, and exclusively used for religious, charitable, or educational purposes shall be exempt from taxation.
(4) No law granting any tax exemption shall be passed without the concurrence of a majority of all the Members of the Congress.
Article XIV Section 4.
(3) All revenues and assets of non-stock, non-profit educational institutions used actually, directly, and exclusively for educational purposes shall be exempt from taxes and duties. Upon the dissolution or cessation of the corporate existence of such institutions, their assets shall be disposed of in the manner provided by law.
Proprietary educational institutions, including those cooperatively owned, may likewise be entitled to such exemptions, subject to the limitations provided by law, including restrictions on dividends and provisions for reinvestment.
Article XIV Section 4.
(4) Subject to conditions prescribed by law, all grants, endowments, donations, or contributions used actually, directly, and exclusively for educational purposes shall be exempt from tax.
refers to those that restrict the power although they are not embodied in the constitutions
. Taxes may be levied only for public purpose;
. The State may tax persons and properties under its jurisdiction;
. the property of a foreign State may not be taxed by another.
. Government agencies performing governmental functions are exempt from taxation
. The power to tax being legislative in nature may not be delegated. (subject to exceptions)
THANK YOU L(-.-)7